The Reserve Bank flagged an acceleration in wages and inflation in coming weeks could prompt interest rate rises, with market expectations firming on June for liftoff after the central bank abandoned its patient posture.
Gone from Dr Lowe’s statement was any reference to the board being “committed to maintaining highly supportive monetary conditions”, or that the board was willing to be “patient” before lifting the cash rate.“The RBA is progressively clearing the way for a rate hike sometime in the months ahead,” AMP Capital chief economist Shane Oliver said, while JPMorgan’s Ben Jarman said the RBA was clearly flagging a rate hike cycle.
Prime Minister Scott Morrison has claimed interest rates would be higher under a Labor government, while Labor’s economic spokesman Jim Chalmers pointed out rates were going up no matter who wins.NAB’s global head of research Ivan Colhoun isn’t ruling out a campaign rate rise, suggesting a particularly strong inflation result and a jobless rate below 4 per cent in March could force the RBA to begin lifting before June.
The Australian government three-year bond yield jumped 16 basis points to 2.48 per cent and the Australian 10-year yield added 6 basis points to 2.86 per cent amounting to a curve flattening. The tone of Dr Lowe’s statement was upbeat, citing unemployment at a 14-year low and set to fall to a 48-year low below 4 per cent, job vacancies at a record high, and strong commodity prices boosting national income.
Grattan Institute chief executive Danielle Wood questioned the budget support, which she said was equal to pumping about 1.3 per cent of GDP worth of stimulus into the economy in the next six months.
In financial world we always say that past performances are never a good indicator. And here is the Governor of RBA who relies on past data to predict the future. What a regressive guy.
As soon as ALP wins. Yes of course, never saw that coming.
Why so soon? We aee at emergency levels & we aren't really in an emergency...
Why not now? It’s getting out of control
Behind the curve- property obsessed.
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Source: SkyNewsAust - 🏆 7. / 78 Read more »