The central banks of Australia and New Zealand did not change interest rates this week. AUD/USD and NZD/USD came under pressure.

The economic situation has compelled various countries to discontinue the "race" of interest rate hikes that have been ongoing since last year. Among them are Australia and New Zealand.

The central banks of both countries decided not to change interest rates in their announcements this week. As a result, AUD/USD and NZD/USD came under pressure, reaching their lowest levels since November 2022.

Aussie and Kiwi Stalled

The Reserve Bank of Australia (RBA) held its first regular policy meeting under its new leadership, Michele Bullock, on Tuesday, September 3rd. On that occasion, the RBA maintained the interest rate at 4.1%. The RBA sought to maintain a hawkish bias, but experts no longer anticipate further interest rate hikes.

Bullock emphasized the readiness to raise interest rates again to achieve the inflation target within the specified timeframe. She added that "the board will continue to monitor developments in the global economy, household spending trends, and inflation and labor market prospects" in future decision-making.

Anneke Thompson, the Chief Economist at CreditWatch, believes that the ongoing weakness influenced the RBA's decision in trade, consumer confidence, and declining trends in core inflation. She also warned that job vacancies continue to decline and could increase Australia's unemployment rate in the coming months.

If the economic outlook worsens, the RBA would have no room to raise interest rates. A similar situation is faced by the Reserve Bank of New Zealand (RBNZ).

The results of the RBNZ meeting earlier this morning (September 4th) indicated a relatively more dovish stance compared to the RBA. RBNZ maintained its interest rate at 5.5% and provided no hints of further hikes. They reiterated their commitment to keeping high interest rates longer while emphasizing an outlook that remains "unchanged" from the discussions in the August meeting.