Breaking: RBA surprises markets with rate hike to 3.85% in May, AUD/USD rallies

At its May monetary policy meeting, the Reserve Bank of Australia (RBA) board members decided to lift the Official Cash Rate (OCR) by 0.25% to 3.85. That said, market players widely anticipated the Aussie central bank’s inaction.

AUD/USD reaction

Following the Aussie central bank’s widely anticipated status quo, the AUD/USD pair dropped nearly 15 pips to test 0.6770 before recovering to 0.6785, where it was trading before the Policy announcement. The pair is trading modestly positive on the day.

Also read: AUD/USD Price Analysis: Well set for further downside past 0.6650 on RBA Day

AUD/USD: 15-minute chart

Trend: Further downside expected

About 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 rises 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.