AUD/USD has dropped on the smaller than was expected 25bp RBA rate hike

The consensus was for a 50bp rate hike from the Reserve Bank of Australia at its October monetary policy board meeting.

But, nope, the Bank has gone with +25bp.

Reserve Bank of Australia Governor Lowe had flagged a slower pace of rate hikes but was cagey on the timing.

In the statement Lowe highlighted that the cash rate has increased "substantially in a short period of time". He said that slowing the pace of rate hikes gives the Bank time and space to assess household spending, wages, inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term and global economic developments.

The most recent inflation data was the (admittedly experimental at this stage):

• Australia's first ever official monthly CPI published; August +6.8% y/y (July +7%)
• the 'core 'measure accelerated to 6.2%

The next official (and much more established) CPI data is due on October 26.

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The Reserve Bank of Australia have opted for a timid approach. AUD/USD update: