Is the Reserve Bank of Australia going to increase the key interest rate?

FOREX NEWS. The Reserve Bank of Australia has recently reconsidered its inflation forecast for the next 2 years, hinting at the possibility of increasing the key interest rate in the 2^nd half of the year. The bank’s quarterly report on monetary and credit policy says that the labor market will strengthen as the mining sector will increase its production volume. However, according to the report, the inflation risk is still high.

The bank’s experts assume that the inflation may exceed the limit of 3% in December 2011, which means it will take place a year earlier than expected. Nevertheless the bank has been maintaining the rate at the level of 4,75% since November 2010.

Numerous experts share the opinion that despite the slowdown in the national economy, the bank’s report unambiguously says that there next interest rate increase will take place in summer. Forex reacted to the news with the strengthening of the Australian Dollar.

Experts from the Department of studying Masterforex-V trading system warn that the AUDUSD is still in a long-term uptrend. However, after coming out of the bullish sloping channel the currency pair formed a bearish momentum of H8 (which may turn out to be a reversal wave). The continuation of the rally is possible in the form of the “Hound of the Baskervilles by Elder/MF” pattern. 1.1011, the ultimate high, will act as a strong resistance level. If the effort to continue the rally fails, the “Moment of Truth” pattern of wave level H8 will be formed. A bearish FZR ofH8 will indicate a mid-term reversal in the form of the classic ABC pattern.