The Australian dollar continued to be a major topic of conversation at the recent Federal Reserve meeting.
The question was asked (and answered) by Reserve Bank of Australia governor Philip Lowe:
What is the outlook for inflation this year and next?
The answer is: more rate pain.
It wasn’t a surprise. The RBA is on pace to deliver a 1% inflation target, while it is also on track to raise interest rates twice this year.
The RBA has said that it expects the cash rate to rise to this year and next year.
That’s only inflation of this year and next year, with two hikes in 2017 and just one in 2018.
Inflation is expected to remain broadly unchanged this year and next, with inflation likely to bottom out in the low-single digits.
This means the RBA is likely stuck with a cash rate for the foreseeable future.