Tag Archives: Reserve Bank of Australia

Commonwealth Bank of Australia expects stable policy rates in October | Instant News


FILE PHOTOS: The Commonwealth Bank of Australia logo adorns their headquarters in central Sydney, Australia, 12 October 2017. REUTERS / David Gray

SYDNEY (Reuters) – Economist at Commonwealth Bank of Australia (CBA) CBA.AX expects the country’s central bank to hold interest rates at a record low 0.25% at its October 6 board meeting, in contrast to calls for cuts from its two main rivals.

Financial markets are expecting a 60% chance of a rate cut by the Reserve Bank of Australia (RBA) to 0.1% from 0.25% now. The yield on the three year government bond has fallen to 0.2%, implying a 33% chance that the target yield curve will also be lowered to 0.10% from 0.25%.

“So the meeting was clearly ‘live’,” wrote Gareth Aird, CBA Australia’s head of economics, adding the RBA will leave policy rates unchanged next month.

“We are confident the RBA will be well aware that the potential costs and risks (of easing) at this point outweigh the potential benefits.”

Aird said tinkering with cash values ​​carries the risk of another important short-term interest rate falling into negative territory, which will obviously deter the RBA from here.

Earlier this week, Westpac Banking Corp. Economist Bill Evans revised the RBA’s interest rate call to predict a 15 basis point cut while the National Australia Bank said easing was likely next month or in November.

The change in attitude follows a speech by RBA Deputy Governor Guy Debelle on Tuesday in which he left the door open for further monetary easing.

Aird CBA said at this stage the increase in the level of government bond purchases was most likely the RBA’s next step in the area of ​​monetary policy.

“We believe the RBA will not introduce new policy options until the current measures are expanded. That led us to conclude that the monetary policy in October was on hold, “he said.

Reporting by Swati Pandey; Edited by Christian Schmollinger

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Australian dollar weakens, bonds stronger on lower interest rate bets; The New Zealand dollar weakened | Instant News


SYDNEY (Reuters) – The Australian dollar hit a six-week low on Wednesday amid rising expectations for further monetary policy easing soon next month, while its New Zealand counterpart also weakened after the country’s central bank left the door open for more cuts. .

FILE PHOTOS: Australian dollar seen in the illustration photo February 8, 2018. REUTERS / Daniel Munoz

Australian dollar AUD = D4 was last down 0.6% at $ 0.7127, a level last seen around mid-August.

The decline came after a speech by Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle on Tuesday in which he hinted at prospects for further policy easing.

The losses in the Aussie were accelerated on Wednesday at Westpac WBC.AX Economist Bill Evans revised his call for forecasting a 15 basis point (bps) cut to cash rates and the target three-year bond yield to 10 bps at the RBA’s October 6 board meeting.

Other analysts including National Australia Bank and Singapore’s TD Securities are also forecasting monetary easing steps in the next month or two.

RBA’s Debelle “provided pretty clear hints that the Board will cut rates and other key policy rates at the October Board meeting,” said Evans of Westpac.

Evans also expects the RBA to extend its bond purchases to maturities of five to 10 years, from three years now.

Bonds strengthened on Wednesday, with three-year yields AU3YT = RR slipped to 0.18% from 0.235% on Tuesday.

Results from a 10 year paper AU10YT = RR fell to 0.86% from 0.9%.

Across the Tasman Sea, New Zealand dollars NZD = D3 fell 0.4% to $ 0.6607, a level last seen in late August.

Earlier, New Zealand’s central bank held official interest rates at record lows and signaled further easing while warning the economy may need support for a long time as the world grapples with the coronavirus pandemic.

The RBNZ also maintains a large-scale asset purchase (LSAP) program of NZ $ 100 billion ($ 66.2 billion).

He added that further stimulus may be needed and prepared to use additional tools such as cheap funding facilities for banks, negative interest rates and purchase of foreign assets.

New Zealand government bonds <0 # NZTSY => goes up at a yield of about 4-5 basis points lower at the end of the long curve.

The Australian government futures contract strengthened, with a three-year bond contract YTTc1 was up 4.5 ticks at 99,780. 10 year contract YTCc1 rose 3.5 ticks to 99.155.

Edited by Sherry Jacob-Phillips

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An Australian central bank official said new policy measures were not considered | Instant News


FILE PHOTOS: Two women walk next to the Reserve Bank of Australia headquarters in central Sydney, Australia February 6, 2018. REUTERS / Daniel Munoz / Photo File

SYDNEY (Reuters) – New monetary policy measures will cost and are not being considered at this time, a senior official at the Reserve Bank of Australia (RBA) said on Monday.

Responding to questions in the Kanga News webinar, RBA Assistant Governor Chris Kent also stressed that negative interest rates were not an option for the country.

He added the RBA was closely watching yields on AU3YT = RR three-year government bonds and would buy more bonds if the yields moved from the target of around 25 basis points.

Reporting by Swati Pandey; Editing by Christian Schmollinger

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Gold stocks, comments c.bank gives Australian shares a slight rise | Instant News


* Australia witnessed the biggest daily surge in virus deaths over the weekend

* Lynas Corp jumped 12% based on contracts with the Pentagon

* Gold shares rise as gold gains due to US-Chinese tensions

With an arpit

27 July (Reuters) – Australian stocks edged higher on Monday as gold shares rose as rising Sino-US tensions and positive comments from central bank officials allayed concerns about the economic downturn from the second wave of corona virus infection.

A senior Reserve Bank of Australia said he was ready to buy government bonds to support the economy affected by the country’s virus if market conditions deteriorated significantly.

Australia recorded the biggest jump in COVID-19 deaths on Sunday when a second wave of infections spread throughout Victoria, the most populous country next to New South Wales.

The S & P / ASX 200 index was up 0.2% at 6,037.4, at 0105 GMT. The benchmark closed 1.16% lower on Friday.

However, broader sentiment was subdued as a diplomatic upheaval between the two biggest economies which heated up after Beijing ordered the United States to close its consulate in Chengdu last weekend. The move came in direct response to Washington’s closure of the Chinese consulate in Houston.

Gold stocks posted gains as gold prices were set to hit record highs on solid safe-haven demand amid rising Sino-US tensions, helping metals and mining sub-indices trade in positive territory.

AngloGold Ashanti shares registered in Australia rose by 8.4%, while Newcrest Mining added 2.8%.

Lynas Corp jumped 12% after rare earths miners said it signed a contract with the US Department of Defense to begin initial design work at a separation facility in Texas.

Woodside Petroleum and Santos led the decline in the energy index, which dropped 1.5%.

The financial sector rose 0.4% lower, with Insurance Australia Group extending losses from last week after recording a 70% decrease in cash income for 2020.

New Zealand’s S & P / NZX 50 benchmark index rose 0.1% lower to 11,620.79.

Local Australian shares and the New Zealand Banking Group fell 0.6%, while Milk fell 1.1%.

Reporting by Arpit Nayak in Bengaluru, Editing by Sherry Jacob-Phillips

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The recovery of the fragile Australian economy rests on containment of the virus: a Reuters poll | Instant News


SYDNEY (Reuters) – Australia’s economy will recover in the coming months as life returns to normal, although much depends on whether authorities can keep a lid on a new coronavirus outbreak in its two largest cities, a Reuters poll found.

A worker wears a protective mask at a cafe in Melbourne after becoming the first city in Australia to apply a mask in public as part of an effort to stop the revival of coronavirus (COVID-19), 23 July 2020. REUTERS / Sandra Sanders

The latest Reuters poll estimates A $ 2 trillion ($ 1.43 trillion) of Australia’s annual gross domestic product (GDP) is still shrinking 3.8% for 2020 as a whole, and experiencing its first recession since 1991.

But the economy is expected to grow 1.3% this quarter and next, following the 7.0% decline expected in the June quarter when many economies were locked.

3.1% growth in 2021 is the median estimate in the July 13-21 poll of 35 analysts, although it will likely be several years before all losses related to COVID-19 are made.

Australia has been more successful than many of its colleagues in controlling the virus and reopening its economy, but suffered a setback this month when Melbourne had to be locked down again to fight a new outbreak.

A small number of new cases also emerged in Sydney, threatening to stop the recovery.

Most importantly, the government responded by extending the main employment support programs for six months until the end of March, thus avoiding what analysts feared would become a “fiscal cliff” for the economy in September.

“At the aggregate level, the reduction in household income from job loss has been more than offset by increased government benefit payments,” said Gareth Aird, CBA’s head of Australian economics.

“This means there is a positive shock to household income even though the economy is in a recession. Now it looks like household income will be well supported until March. ”

The cost will be a government loan of hundreds of billions of dollars, but so far the demand for debt has been strong and bond yields remain close to historic lows.

The Reserve Bank of Australia (RBA) does its part by pledging to keep interest rates at a record low of 0.25% for years to come, while providing cheap funding to banks.

Analysts doubt all of these stimuli will pose a threat to inflation, with estimates of consumer prices more than half to only 0.6% for 2020 and trimmed to 1.6% for 2021. In April each forecast to 1.5% and 2.0%.

(For another story from Reuters global economic poll)

($ 1 = 1.4017 Australian dollars)

Reporting by Wayne Cole; Polling by Shaloo Shrivastava, Tushar Goenka and Md Manzer Hussain; Editing by Kim Coghill

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