It is worth noting that ahead of the December meeting, traders had heightened hawkish expectations regarding the RBA's future actions. Following the release of the latest Consumer Price Index (CPI) report in Australia, the market was confident that the central bank would take a wait-and-see approach this month. The probability of a rate cut had fallen to zero, so a pause became the base scenario. However, just a week before the December meeting, Michele Bullock, speaking in Parliament, outlined hawkish themes. She stated that if inflation proves to be persistent, it will affect future monetary policy decisions. The market interpreted these words as a signal that the RBA is considering raising interest rates next year.

Based on the meeting's results, market participants were correct in their assessment of the situation. Bullock reiterated her previously stated themes and confirmed traders' hawkish expectations.

Firstly, the RBA Governor noted that further rate cuts "may not be required." Thus, it can now be confidently said that the easing cycle is "officially over." Bullock made similar hints at the previous meeting, but now there is no doubt about it.

Secondly, she acknowledged that members of the Bank's governing board discussed the possibility of raising interest rates next year if inflation persists at current levels or accelerates. According to Bullock, the risks have shifted toward tightening monetary policy.

It is essential to note that at the beginning of December (before the RBA meeting), Reuters conducted a survey of economists, in which the majority (19 out of 33) said the interest rate would remain at its current level of 3.6% next year. Ten respondents allowed for a rate cut, while only four predicted an increase. Clearly, following the December meeting, the number of "hawks" among analysts will noticeably increase.

At the same time, interest-rate futures at the beginning of December had already priced in a greater than 70% probability of at least one rate increase by the end of 2026.

Now the focus is on inflation and the labor market. To recap, the Consumer Price Index in Australia rose to 3.8% year-on-year in October, while most analysts expected it to be 3.6%. With this report, the Australian Bureau of Statistics (ABS) changed the format – the Consumer Price Index will now be published monthly. However, with the addition of the Monthly CPI, the ABS did not replace it with the quarterly index.

According to Michele Bullock, with the monthly series of CPI data, "caution is necessary," as this is an additional (for now) experimental, more volatile, and less comprehensive indicator. In this context, the RBA Governor highlighted the importance of the quarterly trimmed mean CPI for Q4 (the release is expected at the end of January 2025), "so the Governing Council can separate one-off price increases from demand-driven pressures."

All of this suggests that the fate of the RBA's interest rate will be decided at the beginning of next year. If key inflation indicators (particularly quarterly data) remain at current levels or begin to slow, the RBA will likely continue its pause. However, if CPI continues to accelerate and labor market tightness persists, the likelihood of an interest rate increase will significantly rise.

Overall, the current fundamental backdrop favors further growth in AUD/USD due to divergent monetary policies between the RBA and the Fed.

The technical picture also confirms this. On the daily chart, the pair remains between the middle and upper lines of the Bollinger Bands and above all lines of the Ichimoku indicator, forming a bullish "Parade of Lines" signal. A similar pattern has also formed on the H4 and W1 timeframes. Long positions should be considered on downward price retracements. The first target is at 0.6650 (the upper line of the Bollinger Bands on the daily and four-hour charts). If the pair breaks this price barrier, the next target for the upward movement will be the 0.6710 level – this is the annual price peak, updated in September of this year.