The Australian dollar rose after Reserve Bank of Australia Governor Glenn Stevens said policy makers will need to raise interest rates at some stage. The so-called Aussie held gains from the past two days versus the U.S. currency as Stevens also said the underlying rate of inflation “is more likely to rise than fall” in the next few years. New Zealand’s dollar weakened against all its major counterparts as the failure of European Union officials to end a deadlock on a new aid plan for Greece damped demand for higher-yielding assets. “Stevens reiterated that rates need to rise and that’s what the market needed to know following the monetary-policy statement the other day,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “Clearly the Aussie is being lifted” by Stevens’ comments. Australia’s dollar traded at $1.0705 as of 4:06 p.m. in Sydney from $1.0685 in New York yesterday, after falling as much as 0.3 percent. The currency was at 86.12 yen from 86 yen. New Zealand’s dollar dropped 0.3 percent to 81.54 U.S. cents, and declined 0.4 percent to 65.59 yen. “New information will, as always, be important in our monthly assessments of what monetary policy needs to do,” Stevens said in prepared remarks for a speech today in Brisbane. “As far as prices are concerned, we will get another comprehensive round of data in late July.” Rate Expectations Stevens has kept the cash-rate target at 4.75 percent for the past six meetings, the longest pause since 2007. The central bank will boost its benchmark rate by 15 basis points over the next 12 months, according to a Credit Suisse AG index, up from 10 basis points yesterday. The central bank’s statement today was "another warning shot that market pricing of forthcoming RBA tightening remains insufficient to contain medium-term inflation,’’ Annette Beacher, head of Asia-Pacific research at TD Securities Ltd. in Singapore, wrote in a note to clients today. The central bank has forecast that Australia’s economic growth will be 4.25 percent this year. Consumer prices will rise 3.25 percent over the period, and core inflation will reach 3 percent, it said in its quarterly monetary-policy statement released May 6. The Aussie has appreciated 1.4 percent over the past week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The kiwi was up 0.6 percent. The Australian dollar weakened earlier after an industry report showed consumer confidence deteriorated in June to the lowest level in two years. Sentiment Index Australia’s sentiment index dropped 2.6 percent to 101.2 from a month earlier, the biggest decline since January, according to a Westpac Banking Corp. (WBC) and Melbourne Institute survey of 1,200 consumers taken June 6-12 and released today. EU finance ministers agreed to convene again on June 19 after failing to reconcile a German-led push for bondholders to share part of the cost of a new Greek aid plan. Ten-year Australian bond futures for June delivery fell to 94.750 from 94.805 on the Sydney Futures Exchange. The implied yield gained 5.5 basis points to 5.25 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was unchanged at 3.355 percent. To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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