On Tuesday, the Reserve Bank of Australia (RBA) announced a 25 bps rate hike from 3.1 percent to 3.35%. With this increase, the Australian central bank has carried out a cumulative hike rate.

The amount of those rate hike was around 325 bps since last year to counter the surge in inflation. In a statement after the rate announcement, Governor Philip Lowe said a further rate hike was still needed. 

The reason is because Australia's current inflation rate is still quite far from the 2-3 percent target. That further rate hikes are still needed over the next few months to ensure inflation moves down to the target range. 

They also need to make sure the spike in inflation that occurs is only temporary, As Lowe said. The hawkish statement was motivated by a surge in Australian inflation.

Inflation in Australia Grew by 7.8%

The Australian inflation grew by 7.8 percent on an annual basis in the fourth quarter of 2022. This is the fastest rate of increase in the last 30 years.

That situation also indicates that a series of rate hike carried out since last year has not been able to dampen the surge in inflation. For information, the RBA had slowed the pace of hike rates at the end of 2022.

They did that in order to keep the economy from being affected by high interest rates. Lowe expects inflation to fall to 4.75 percent by the end of 2023 due to the impact of rising interest rates. 

However, weakening inflation to the target range is likely to be achieved only in 2025. This marks that the Australian economy will face many challenges in the future. 

AUD/USD Tries to Rebound

Lowe also predicts the impact of high interest rates will erode economic growth by up to 1.5 percent over the period 2023 and 2024. Rate hike and RBA Governor's hawkish statement brought an impact.

Those was successfully pushed the Australian Dollar to strengthen against the US Dollar. At the time of this news, AUD/USD was in the range of 0.6935 or up by 0.78 percent on a daily basis. 

The pair is seeking to trim the slump triggered by the release of US NFP data late last week. Elsewhere, gold commodity also experiences a change due to the over situation. 

Traders will view gold as a safe haven asset and buy it. Demand for gold will still be strong this year, as said by Philip Streible, an analyst at Blue Line Futures Chicago. 

Low Rate will Make Gold Price Strong

This week, the market's focus will be on speeches by Fed officials, including chairman Jerome Powell. Last week, the United States central bank raised interest rates by a quarter of a percent to 4.5%-4.75%. 

Low interest rates are likely to strengthen gold prices. According to Exinity's Han Tan, as long as the Fed is in a condition that it does not have to raise interest rates above the 5% forecast, then the outlook for gold will still be bright. 

Meanwhile, analyst Michael Hewson assessed if the bearish "severity" of gold in the past two days suggests that the price may have reached a near-term peak. 

He also took into account the risk of a decline to the level of $1800. Elsewhere, WTI crude oil prices rose to around $75 a barrel amid growing concerns about supply and optimism.

Optimism is Happened for Oil Commodity 

That optimism is related to oil demand from China would recover. On the supply side, operations at the Ceyhan oil terminal in Southern Turkey were halted.

That comes as a precaution following a major earthquake in the region. In fact, the refinery can export up to 1 million barrels of oil per day.

On the demand side, IEA Executive Director Fatih Birol said that China's economy has the potential to rebound higher than expected. That is why; this has the potential to boost crude oil demand.