Australian Central Bank: Maintaining past tightening stance in person
2024-08-08
■ The Reserve Bank of Australia (RBA) has held its policy interest rate unchanged for six consecutive meetings, maintaining its previous tightening stance
■ Pay attention to signs of changes in the labor market and the Australian price and employment data to be released next week
On the 6th, the Reserve Bank of Australia (RBA) maintained its policy rate at a 12-year high of 4.35%. This aligns with market expectations and marks the sixth consecutive meeting where interest rates remain unchanged. The statement stated, "Although the inflation rate has significantly decreased since its peak in 2022, the core consumer price index (CPI) year-on-year growth rate has hardly declined in the past year, and the core inflation rate is still too high. According to the latest forecast, the inflation rate will take some time to continue to return to the target range. The data shows that we still need to be vigilant about the risk of inflation rising, and the board has not ruled out any possibility. Policies must remain sufficiently restrictive until the board is confident that the inflation rate will continue approaching the target range.
RBA President Brock revealed at a press conference that the board also discussed interest rate hikes and stated that the current policy is appropriate, denying the possibility of a rate cut shortly. The average CPI correction monitored by RBA increased 3.9% year-on-year from April to June. Although it slowed down, according to the quarterly financial policy report, the inflation rate is expected to reach 2.9%, within the Central Bank target (2-3%) by December 2025. The RBA predicts that the salary index will increase by 3.5% year-on-year in December 2025, further slowing down compared to the first quarter of 2024 (a year-on-year increase of 4.1%). The June employment statistics show an increase in the unemployment rate and a slowdown in the labor market. In this context, the release of the April-June salary index on the 13th and the July employment statistics on the 15th have attracted much attention on whether they can trigger a change in RBA's tightening stance. The interest rate futures market expects the board of directors to maintain the policy rate unchanged in September. Still, it predicts that the probability of a 0.25% rate cut by the board in November exceeds 40%, and the likelihood of a rate cut in December is close to 70%.
■ Pay attention to signs of changes in the labor market and the Australian price and employment data to be released next week
On the 6th, the Reserve Bank of Australia (RBA) maintained its policy rate at a 12-year high of 4.35%. This aligns with market expectations and marks the sixth consecutive meeting where interest rates remain unchanged. The statement stated, "Although the inflation rate has significantly decreased since its peak in 2022, the core consumer price index (CPI) year-on-year growth rate has hardly declined in the past year, and the core inflation rate is still too high. According to the latest forecast, the inflation rate will take some time to continue to return to the target range. The data shows that we still need to be vigilant about the risk of inflation rising, and the board has not ruled out any possibility. Policies must remain sufficiently restrictive until the board is confident that the inflation rate will continue approaching the target range.
RBA President Brock revealed at a press conference that the board also discussed interest rate hikes and stated that the current policy is appropriate, denying the possibility of a rate cut shortly. The average CPI correction monitored by RBA increased 3.9% year-on-year from April to June. Although it slowed down, according to the quarterly financial policy report, the inflation rate is expected to reach 2.9%, within the Central Bank target (2-3%) by December 2025. The RBA predicts that the salary index will increase by 3.5% year-on-year in December 2025, further slowing down compared to the first quarter of 2024 (a year-on-year increase of 4.1%). The June employment statistics show an increase in the unemployment rate and a slowdown in the labor market. In this context, the release of the April-June salary index on the 13th and the July employment statistics on the 15th have attracted much attention on whether they can trigger a change in RBA's tightening stance. The interest rate futures market expects the board of directors to maintain the policy rate unchanged in September. Still, it predicts that the probability of a 0.25% rate cut by the board in November exceeds 40%, and the likelihood of a rate cut in December is close to 70%.