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The next monthly meeting of the Reserve Bank of Australia board of directors could give new clues as to when the cash rate may rise, but it’s safe to say it will stay at an all-time high of 0.1% for a while yet. RBA Governor Philip Lowe will hold a rare press conference after Tuesday’s meeting to make sure the right message gets out on the outlook. And if there is any doubt as to what the council is trying to accomplish, Dr Lowe will have another chance to set the record straight when he delivers a speech to the Economic Society of Australia on Thursday. The central bank has repeatedly said that interest rates will not rise until inflation is sustainably within the 2-3% inflation target, an event it expected not to happen before 2024 at the earliest. However, economists are increasingly speculating that this could be brought forward to 2023 or even sooner, given the strength of the economy, and particularly in a labor market. The RBA reported that Tuesday’s meeting had a few decisions to make, which could influence those discussions further. As one of its policy tools alongside the spot rate, the RBA targets the three-year government bond to ensure that its yield, or interest rate, stays at or near 0.1%. . Most fixed rate mortgages have three-year bonds. He maintains the target by buying the three-year benchmark bond – which matures in April 2024 – but now must decide whether to focus on November 2025 as a new three-year benchmark. There is a growing feeling that it won’t and will stick to the April 2024 version, as switching to the later-maturing bond would suggest the RBA has no plans to hike the rate. before 2025. The bank will also announce the next step in its quantitative easing, or five- and ten-year bond purchase program, which aims to keep market interest rates and borrowing costs low. Its second tranche of $ 100 billion under the program is expected to be used up in September. Analysts speculate that the next step may be less important. Economists will also focus on the RBA’s latest take on the housing market after data last week showing further price hikes, coupled with a further rise in home loans, especially to investors. Ahead of the board meeting, there is a wave of economic indicators for retail, construction approvals, job vacancies, consumer confidence and salaried jobs on Monday and Tuesday. Meanwhile, Australian stocks are expected to get a stable start on Monday, with the futures market trading unchanged from the previous close. The benchmark S & P / ASX200 closed 43 points, or 0.59%, up to 738.6 on Friday. Wall Street hit new highs on Friday after new jobs figures showed strong new gains, but not enough to trigger an interest rate hike by the U.S. Federal Reserve. The Labor Department’s employment report showed non-farm payrolls increased by 850,000 jobs last month, but the total is 6.8 million lower than its February 2020 high. The Dow Jones Industrial Average rose 152.82 points, or 0.44%, to 34,786.35, according to the S&P 500 gained 32.4 points, or 0.75%, to 4,352.34 and the Nasdaq Composite added 116.95 points, or 0.81%, at 14,639.33. US markets will be closed Monday due to Independence Day. Associated Australian Press
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The next monthly meeting of the Reserve Bank of Australia board of directors could give new clues as to when the cash rate may rise, but it’s safe to say it will stay at an all-time high of 0.1% for a while yet.
RBA Governor Philip Lowe will hold a rare press conference after Tuesday’s meeting to make sure the right message gets out on the outlook.
And if there is any doubt as to what the council is trying to accomplish, Dr Lowe will have another chance to set the record straight when he delivers a speech to the Economic Society of Australia on Thursday.
The central bank has repeatedly said that interest rates will not rise until inflation is sustainably within the 2-3% inflation target, an event it expected not to happen before 2024 at the earliest.
However, economists are increasingly speculating that this could be brought forward to 2023 or even sooner, given the strength of the economy, and particularly in a labor market.
The RBA reported that Tuesday’s meeting had a few decisions to make, which could influence those discussions further.
As one of its policy tools alongside the spot rate, the RBA targets the three-year government bond to ensure that its yield, or interest rate, stays at or near 0.1%. . Most fixed rate mortgages have three-year bonds.
He maintains the target by buying the three-year benchmark bond – which matures in April 2024 – but now must decide whether to focus on November 2025 as a new three-year benchmark.
There is a growing feeling that it will not and will stay with the April 2024 version, as switching to the later-maturing bond would suggest that the RBA does not expect to hike the rate until 2025.
The bank will also announce the next step in its quantitative easing, or five- and ten-year bond purchase program, which aims to keep market interest rates and borrowing costs low.
Its second tranche of $ 100 billion under the program is expected to run out in September.
Analysts speculate that the next step may be less important.
Economists will also focus on the RBA’s latest take on the housing market after data last week showing further price hikes, coupled with a further rise in mortgage lending, especially to investors.
Ahead of the board meeting, there is a wave of economic indicators for retail, construction approvals, job vacancies, consumer confidence and salaried jobs on Monday and Tuesday.
Meanwhile, Australian stocks are expected to get a stable start on Monday, with the futures market trading unchanged from the previous close.
The benchmark S & P / ASX200 closed 43 points, or 0.59%, up to 738.6 on Friday.
Wall Street hit new highs on Friday after new jobs figures showed strong new gains, but not enough to trigger an interest rate hike by the US Federal Reserve.
The Ministry of Labor’s employment report showed non-farm payrolls increased by 850,000 jobs last month, but the total is 6.8 million below its peak in February 2020.
The Dow Jones Industrial Average rose 152.82 points, or 0.44%, to 34,786.35, the S&P 500 gained 32.4 points, or 0.75%, to 4,352.34 and the Nasdaq Composite added 116.95 points, or 0.81%, to 14,639.33.
US markets will be closed Monday due to Independence Day.
Associated Australian Press
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