Interest Rates

China has implicitly acknowledged the failure of its monetary policy aimed at halting the slide in the economy and property sector by announcing two separate rate cuts within four days.

We are seeing a very different approach to the one taken a year ago, as we again head into 2022 with Covid threatening global health and economic activity.

The RBA maintains that the dramatic change to US Federal Reserve monetary policy announced yesterday will have no impact on its own policy plans for 2022.

The RBA ends 2021 with its key interest rate steady on 0.10% and no sign of any change soon, despite continuing suggestions that it will be forced by rising inflation to boost rates.

As expected, the RBNZ yesterday lifted its key cash rate 0.25% to 0.75% which will be followed today by an similarly-anticipated decision by South Korea’s central bank to lift its key rate to 1%.

Despite some frantic tap dancing in various quarters about inflation, according to the Reserve Bank there remains little chance that official interest rates are going to rise before 2024.

Wall Street ended at new highs as investors accepted the long-awaited decision from the US Federal Reserve to start tightening monetary policy by reducing its bond buying program, starting this month.

The RBA has dropped a key part of its monetary policy framework to support the Australian economy, but left in place the record low cash rate of 0.10% and bond purchase commitment.

As expected, the Reserve Bank of NZ (RBNZ) has lifted its key interest rate; not so expected was APRA’s decision to introduce a small tightening of controls over housing finance.

No change to monetary policy from Tuesday’s October meeting of the Reserve Bank board and no updates on mooted moves to control the surge in house prices, either.

Monetary policy in Australia and New Zealand will head in radically diametric directions this week as the two countries’ Reserve Banks look set to provide very different decisions and post-meeting statements.

The equivocation inherent in the RBA’s qualitative easing policy announcement this week and the market’s response to it both highlight the fact that nobody is remotely sure where the economy goes from here.

The gathering economic impact from the continued lockdowns has seen the RBA taper its quantitative easing program of bond buying by 20%, but extend the program until at least mid-February.

The sudden outbreak of Covid Delta in the Auckland area and snap lockdown has forced the Reserve Bank of NZ to hold off lifting its key cash rate.

A raft of various factors from corporate earnings to Covid Delta infection rates likely mean another challenging week for markets, which on Friday were in record-setting mode.

As we head further into the Delta-driven lockdowns in place across the country, RBA Governor Philip Lowe says he believes it is “quite unlikely” Australia will suffer a recession this year. 

The RBA held official interest rates at record low levels and kept its quantitative easing program unchanged in a modest reaction to the worsening lockdowns in Sydney and Southeast Queensland.

Major events this week include the US jobs data for July on Friday, a continuation of the June 20 earnings season, and in Australia there’s the Reserve Bank’s August monetary policy meeting.

The US Federal Reserve has moved closer to winding back its support for the US economic recovery by declaring that “progress” had been made towards its economic goals.

With stockmarkets at record highs despite the Delta variant continuing its advance, surging Australian inflation, mixed signals on inflation and a weak ore price: what will out in this shaky equation?

Australia’s Delta Covid-driven lockdowns in Sydney and Victoria will dominate local markets this week, as will the rising infection numbers in Tokyo and elsewhere.

Thumbs up from the currency markets yesterday to the news that the Reserve Bank of New Zealand plans to end its $NZ100 billion quantitative easing program next week.

Plenty on this week to grab the attention of markets and investors, with the Covid Delta variant, US CPI, key Chinese economic data, Australian job figures and lots more in focus.

The recent flattening of the Treasury yield curve, usually a sign of slowing growth, is at odds with what is happening in most major economies where economic metrics remain strong.

Is the slide in US bond yields due to Chinese governmental interference, a signal of fears about economic growth, or a reaction to another surge in Covid infections around the world?

The Reserve Bank has made a small step towards restoring monetary policy to a normal footing by starting the tapering its quantitative easing bond purchases, a reflection of its confidence in the local economy.