Australian shares are set to open higher on Monday, tracking a rally on Wall Street as investors hope the powerful US Federal Reserve will back off its aggressive pace of monetary tightening.
Financial markets indicate a peak of 5 per cent by May, before receding to 4.6 per cent by the end of next year on speculation James Bullard argued the Fed funds rate would need to reach a minimum range of 5 per cent to 5.25 per cent.Meanwhile, the Reserve Bank of Australia is projected to lift the cash rate by 0.25 percentage points to 3.1 per cent next month followingFutures markets placed an 87 per cent chance on the RBA increasing the benchmark by 0.25 percentage points and a 13 per cent chance of holding steady.
This would be in contrast to its Australian peer which started to shift to 0.25 percentage points moves in October, awaiting the effects on consumer spending following 2.75 percentage points worth of tightening this year.One of the reasons for the RBNZ’s expected step-up is that its next policy decision is not due for another three months. The NZ central bank holds seven policy meetings a year, against 11 for the RBA.
BLSHigh Somebody had a change of heart over the weekend after a bad week?