AUD/JPY Establishes over 90.00 as RBA Favors Gradual Balance Sheet Easing Program

The AUD/JPY pair has showed a sharper upward move after being underwhelming in the early Tokyo session. The risk barometer stayed in a modest range of 90.18-90.44 and now has surged significantly to around 90.60 after Reserve Bank of Australia (RBA)’s Christopher Kent said that the central bank is in no haste to kick-start its balance sheet reduction operation.

The current spike in the price pressure caused the RBA to boost its interest rate by 25 basis points (bps) for the very first time since the Covid-19 epidemic in May’s monetary policy statement. The action was absolutely unexpected since the RBA did emphasize in its comments that the central bank is not seeing rate rises sooner.

As RBA has pushed up its rate cycle, the market investors started expecting that the RBA will also commence its balance sheet reduction program to speed up the inflation-controlling procedure. Now, the RBA has indicated that the central bank is in no mood to bank upon quantitatively easing forcefully.

RBA Christopher Kent ordered that the Bank would continue to be able to maintain effective control over the cash rate as it withdraws monetary policy stimulus in the term ahead,' as per Reuters.

Meanwhile, higher-than-anticipated inflation data in Tokyo are expected to limit the sheer quantity of stimulus packages supplied by the Bank of Japan (BOJ) to accelerate the growth rate. Annual Japan’s National Consumer Price Index (CPI) number at 2.5 percent , much higher than the expectations of 1.5 percent and the earlier print of 1.2. 

AUD/JPY