The Australian dollar fell today, reaching the lowest price in five years against its New Zealand counterpart, after the minutes of the latest Reserve Bank of Australia policy meeting confirmed that policy makers may consider lowering interest rates even more.
The RBA left its main interest rate unchanged on the December 3 meeting, but signaled that it may perform an interest rate cut in the future:
The Board’s judgement remained that, given the substantial degree of policy stimulus that had been imparted, it was prudent to hold the cash rate steady while continuing to gauge the effects of earlier reductions, but not to close off the possibility of reducing it further should that be appropriate to support sustainable growth in economic activity, consistent with the inflation target.
It is a stark contrast to the Reserve Bank of New Zealand, which considers raising borrowing costs. As a result, the Aussie remains very soft compared to the kiwi.
AUD/USD was down from 0.8946 to 0.8932 as of 10:47 GMT today. AUD/NZD dropped from 1.0828 to 1.0788, reaching the weakest rate since October 2008.
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