The Reserve Bank of Australia: Will interest rate cuts begin after August
2024-03-20
■ In three consecutive meetings, the policy interest rate remained at 4.35%, and the statement removed the possibility of further interest rate hikes
■ Pay attention to employment and price statistics after February, and according to quarterly monetary policy reports, interest rate cuts may begin after August
The Federal Reserve Bank of Australia (RBA) maintained its policy interest rate at 4.35% in its board meetings on the 18th and 19th. This is the third consecutive time since December last year and February this year that interest rates have remained unchanged. The statement stated: "Although inflation rates are still high, recent information indicates a slowdown in economic growth." "We expect inflation rates to be within a sustainable target range for a while.". However, the statement in February that mentioned "not ruling out further interest rate hikes" was replaced with "the board does not rule out deciding anything, nor does it rule out not deciding anything", indicating that the possibility of further interest rate hikes has decreased.
The Consumer Price Index (CPI) for January increased by 3.4% year-on-year, while the core CPI, considered the benchmark by the Australian Federal Reserve, increased by 3.8% year-on-year. Although this is a single-month data, from October to December 2023 (4.1% and 4.2% respectively), the inflation trend has begun to slow down. The unemployment rate is 4.1%, reaching a high level in two years, indicating that labor demand is slowing down. According to the February employment statistics released on the 21st, the unemployment rate is expected to drop to 4.0%. Federal Reserve of Australia has pointed out that wage growth peaked between October and December last year and may slow down in the coming year. If the year-on-year increase rate of the February CPI announced on the 27th further slows down, the Federal Reserve of Australia's monetary policy will shift from a neutral stance to a loose stance.
In the Monetary Policy Report (SMP) released by the Council in February, inflation expectations were lowered, CPI is expected to reach the central bank's target (2-3%) by December 2025, with core CPI expected to reach in June of the same year. Although people will also closely monitor the latest SMP released by the next council meeting on May 6th and 7th, the possibility of the Federal Reserve cutting interest rates at that meeting is relatively low. According to the meeting minutes released on April 2nd (for the meetings on March 18th and 19th), the start time of interest rate cuts will be discussed. However, considering the quarterly release of SMP and the timing of the August Council, the likelihood of interest rate cuts starting in June is low and may be implemented after August.
■ Pay attention to employment and price statistics after February, and according to quarterly monetary policy reports, interest rate cuts may begin after August
The Federal Reserve Bank of Australia (RBA) maintained its policy interest rate at 4.35% in its board meetings on the 18th and 19th. This is the third consecutive time since December last year and February this year that interest rates have remained unchanged. The statement stated: "Although inflation rates are still high, recent information indicates a slowdown in economic growth." "We expect inflation rates to be within a sustainable target range for a while.". However, the statement in February that mentioned "not ruling out further interest rate hikes" was replaced with "the board does not rule out deciding anything, nor does it rule out not deciding anything", indicating that the possibility of further interest rate hikes has decreased.
The Consumer Price Index (CPI) for January increased by 3.4% year-on-year, while the core CPI, considered the benchmark by the Australian Federal Reserve, increased by 3.8% year-on-year. Although this is a single-month data, from October to December 2023 (4.1% and 4.2% respectively), the inflation trend has begun to slow down. The unemployment rate is 4.1%, reaching a high level in two years, indicating that labor demand is slowing down. According to the February employment statistics released on the 21st, the unemployment rate is expected to drop to 4.0%. Federal Reserve of Australia has pointed out that wage growth peaked between October and December last year and may slow down in the coming year. If the year-on-year increase rate of the February CPI announced on the 27th further slows down, the Federal Reserve of Australia's monetary policy will shift from a neutral stance to a loose stance.
In the Monetary Policy Report (SMP) released by the Council in February, inflation expectations were lowered, CPI is expected to reach the central bank's target (2-3%) by December 2025, with core CPI expected to reach in June of the same year. Although people will also closely monitor the latest SMP released by the next council meeting on May 6th and 7th, the possibility of the Federal Reserve cutting interest rates at that meeting is relatively low. According to the meeting minutes released on April 2nd (for the meetings on March 18th and 19th), the start time of interest rate cuts will be discussed. However, considering the quarterly release of SMP and the timing of the August Council, the likelihood of interest rate cuts starting in June is low and may be implemented after August.