AUD/JPY tumbles below 93.40 as RBA announces a rate hike by 50 bps

• AUD/JPY has witnessed significant offers on a 50 bps rate hike by the RBA.
• The extent of the rate hike has remained in line with the estimates.
• The Official Cash Rate (OCR) has been elevated to 1.35%.

The AUD/JPY pair has slipped sharply below 93.40 as the Reserve Bank of Australia (RBA) has elevated its interest rates by 50 basis points (bps). The extent of the rate hike by the RBA has remained in line with the consensus. Officially, RBA Governor Philip Lowe has elevated the Official Cash Rate (OCR) to 1.35%.

Considering the soaring price pressures in the Australian economy, a rate hike was highly required. The inflation rate in the Australian economy jumped to 5.1% in the first quarter of CY2022. Soaring price pressures amid costly fossil fuels and food products are impacting the households in the economy.

Earlier, the risk barometer witnessed a minor correction after hitting a high of 94.00. Despite the release of the upbeat Caixin Services PMI, the aussie dollar faced correction. The economic data has landed at 54.5, extremely higher than the forecasts of 47.3 and the prior print of 41.4. It is worth noting that Australia is a leading exporter to China and better-than-expected China economic data is supportive for the antipodean.

On the Tokyo front, the continuation of an ultra-loose monetary policy by the Bank of Japan (BOJ) will weigh pressure on the yen bulls as other nations are suiting up for more rate hike announcements this month. The economy is facing the headwinds of soaring oil and food prices, which have elevated their plain-vanilla inflation rate but not the core Consumer Price Index (CPI).