Already a subscriber?The Bank of Canada has become the first major central bank to cut interest rates, the first time since March 2020, with economists saying it has “lifted the mood” about the prospects for the US Federal Reserve to follow suit.
Tiff Macklem, the Bank of Canada governor, at a press conference after announcing interest rates would fall.which is expected to reduce interest rates by 25 basis points from 4 per cent. While the US Fed, which is scheduled to meet on June 11 and June 12, is not expected to cut rates next week, markets are pricing in one or two cuts by the end of the year.
“The surprising element was they have opened the door for further rate cuts,” said GSFM investment strategist Stephen Miller, adding that the parallels with the Reserve Bank and the Fed should not be overplayed.“That last inflation report was very good, slightly better than expectation … that’s a fair way from where similar measures are for the Fed and the RBA.”
“We are now at an inflation point where we can safely say that rate increases globally are in abeyance,” he said.suggested the economy had far more momentum than initially thought, bolstering the view that the Reserve Bank of Australia will be unable to cut interest rates this year.Traders pushed back the expected timing of the RBA’s first rate cut, with the markets fully priced for some monetary easing by July, from May before the GDP data.
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