When is the RBA rate decision and how could it affect the AUD/USD pair?

RBA rate statement overview

The Reserve Bank of Australia (RBA) will publish the latest monetary policy statement and rate decision at 03:30 GMT today.

The central bank is widely expected to keep the interest rates unchanged at a record low of 1.5 percent and retain a neutral policy stance along with an upbeat labor market outlook.

Low key event

Westpac analysts believe the RBA rate decision and the Governor's statement will be a low key event with the AUD traders focused on the federal budget announcement, scheduled at 7:30 pm local time, which is expected to offer a fair bit of stimulus in the form of tax cuts.

Consumer spending, which forms a major part of the Australian economy, has taken a hit in the recent months, bolstering recession fears.  Tax cuts, therefore, could help boost spending, although that is unlikely to deter RBA from adopting an easing bias in the coming months, as the economy seems to be facing a perfect storm of record household debt and falling property values.

Westpac expects the RBA to move to a clear easing bias following the May meeting. However, it is unlikely that there will be any hints of this action in the April Governor’s Statement.

Analysts at TD securities are of the opinion that the Bank can afford to assess developments over coming months - the next read on consumption is Q1 GDP on 5th June.

All-in-all, today's rate decision may not move the needle on the Aussie pairs unless the central bank downgrades its language on the labor market, in which case the AUD will likely take a beating across the board.

It is worth noting that AUD/USD sidelined in the range of 0.7170-0.7050 since March 20 - a sign, investors do not see RBA delivering a hawkish/dovish surprise before the budget announcement. As of writing, the spot is trading largely unchanged at 0.7107.

• RBA Preview: Rates likely to be on hold

About the RBA rate decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.