Home Forex News COVID-19 Pandemic Blunts The Impact Of Inflation As The AUDUSD Experiences An...

COVID-19 Pandemic Blunts The Impact Of Inflation As The AUDUSD Experiences An Uptick


The Australian Dollar (AUD/USD) experienced a great turn on Wednesday and that is following reports of a substantial rise in its value. It is a change that is being closely linked to the COVID-19 pandemic and its effects. The deadly coronavirus has already robbed many lives and plunged citizens in different countries in a state of financial turmoil.

The level of inflation in the home country has gone up in a way many people never expected according to reports. Fears about some potential higher “interest rates” have been toned down and that is because the effects of the COVID-19 pandemic have been highlighted.

The Official data is already out and it is easy to see the 0.3% rise in the Consumer Price Index on the quarter. The figure for the full year is 2.2% and analysts have come forward to quickly point out to the annualized rise, terming it an unexpected one. The projection made earlier pointed out to a 1.9% rise.

COVID-19 pandemic is affecting the globe economically, and many countries are looking for ways to reduce its adverse effects on the economy. However, the preservation of human lives is being given priority according to sources. The introduction of lockdowns and curfews has all been ways to try and combat the spread of the deadly virus.

The dire economic implication of the COVID-19 pandemic is said to have caused a disconnection between the interest rate policy and the inflation data globally. Analysts indicate pessimism saying there are quite slim chances that the interest rates could be escalating anytime soon.

It was recently that the Reserve Bank of Australia gave the way forward about the current, record-low borrowing costs. According to it, these costs might be persistent over an extended period.

RBA understands its mandate quite well and thus it will focus on ensuring that the consumer price inflation remains at values of between 2% and 3%. The prevailing disinflationary conditions have hit hard the Australian central bank, but it is not the only one hurt. It is a Global Financial Crisis that is proving quite difficult to deal with for all. It is a rare thing for the CPI rate to stubbornly stick at a value of 2%.


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