Australia is also grappling with the developed-world quandary of weak inflation – partly a factor of the economy adjusting after the mining boom to regain competitiveness and partly imported from overseas. Given two previous rate cuts in May and August, the decision by the RBA came as no surprise as the central bank indicated a desire to wait for upcoming data to assess the effectiveness of stimulus measures deployed recently, and the next move by the U.S Federal Reserve later this month.
Advertisement
For the rest of the week, the European Central Bank and the Bank of Canada are set to release their respective benchmark interest rates and policy statements. “The Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time”, said RBA Governor Glenn Stevens, who retires this month after a decade in the top job.
In the former case, the “Aussie” was bolstered by forecast-matching news from the RBA, which took no action on interest rates in September, leaving the rate at 1.5%.
“This doesn’t mean that rates won’t go lower.”
Why should traders care? . “In theory, a rate cut gives consumers some more spending money which helps to kick along the economy”.
With dealers and investors searching for the currency trade that will dominate the next month or two, upward pressure on the yen continues in the absence of much clarity on the chances of a rise in USA interest rates by the end of the year.
Canadian interest rate and monetary policy statement, out Wednesday 7 September.
That left the expected rates path for the Reserve Bank intact. Before that, rates were pinned at 1% from 2011 to 2015. “Another low inflation reading combined with a stubbornly high dollar could result in the cash rate moving lower”.
“Australia has always been a net importer of capital, especially in the private sector”, Morrison said in a Bloomberg Address late last month. Given how many components, or indicators of them were already out, the odds of a collapse in the data was very low, he said. The new governor inherits an economy underpinned by increased resource exports, a housing construction boom and an uptick in services industries.
After the RBA announced interest rates would remain on hold at 1.50% for September, some experts are predicting that we’ve seen the last rate change until next year. The interest rate now sits at 0% and is one of the lowest in the world.
Advertisement
“The yen is being bought against all other currencies, including the Swiss franc”, said Toshihiko Sakai, senior manager of forex and financial products trading at Mitsubishi UFJ Trust and Banking Corp. Unless there is a significant deterioration in this situation, a rate hike this year seems appropriate.
