Following its monthly monetary policy meeting on Tuesday, the bank’s board held rates at the record low level where they have been since late March when much of the economy was lockdown to stop the spread of the coronavirus.
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While the Australian economy is doing better than originally feared in the face of the coronavirus pandemic a senior Reserve Bank official has warned government fiscal and RBA monetary policy (interest rate) help will be needed for years.
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The Reserve Bank of NZ has left its official cash rate at 0.25 percent, but like all other central banks around the world, it remains uncertain about the future and whether the current level of stimulus is enough.
Read MoreThe release yesterday of the Reserve Bank’s June board meeting minutes a fortnight ago did not change thinking on the outlook for the economy – it’s still tough, interest rates will remain low and unemployment is the biggest problem, even though it may not quite be the same concern as it was when the lockdowns started in March.
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Contrary to the expectations of many in Wall Street (and President Trump), the US economy won’t be taking off into recovery any time soon, according to the US Federal Reserve’s latest post monetary policy meeting statement and quarterly forecasts.
Read MoreNo movement in the cash rate of 0.25% from the Reserve Bank’s June meeting yesterday as the bank also continues to target the three-year bond rate at 0.25%.
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The economy is front and centre this week in Australia with the monthly Reserve Bank meeting tomorrow, the March quarter national accounts and GDP figures on Wednesday and a string of important data releases for April and May.
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The Reserve Bank of New Zealand has boosted its major support package by 90% to $NZ60 billion while both keeping the Official Cash Rate steady at 0.25%, and suggesting that it could be cut further.
Read MoreNo change in interest rates from the Reserve Bank – an expected outcome from the May meeting yesterday but we got more bad news about the damage being done to the economy by the COVID-19 related lockdowns.
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This is similar to the recovery in 2009 and certainly throughout 2013 when the market was supported by the final instalment of quantitative easing. As I continue to promote, the massive liquidity being injected by central banks and Governments around the world has to find a home somewhere.
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Looking at the data released this week, you can understand why the Bank of Japan moved to an even easier monetary policy stance at its truncated one-day meeting on Monday.
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The March quarter’s Consumer Price Index gave us a hint of what might have been had the COVID-19 pandemic not hit, but the data also confirmed that apart from government-driven charges for tobacco and alcohol costs and private health care, the 0.3% quarter on quarter and 2.2% annual reading would have been much lower.
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While the BOJ kept its interest rate targets unchanged, as had been widely expected, it pledged to buy an unlimited amount of bonds to keep borrowing costs low as the Abe government tries belatedly to spend its way out of the deepening economic pain from the coronavirus pandemic.
Read MoreReserve Bank governor Philip Lowe has given the strongest (and gloomiest) forecasts for the looming hit to Australian economic activity from the COVID-19 pandemic and measures governments have taken to control its spread.
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As expected China cut its key loan prime rates (LPR) on Monday but that that still leaves the rates the highest among major economies.
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This note looks at what QE is and how it entails printing money, why it’s being used and what the risks are.
Read MoreThe People’s Bank of China (PBOC) said it was lowering the one-year medium-term lending facility (MLF) loans to financial institutions to 2.95%, the lowest since the liquidity tool was introduced in September 2014, down 20 basis points from 3.15% previously.
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The Reserve Bank has warned that the Australian economy faces a “very large economic contraction” in the current June quarter.
Read MoreTomorrow’s Reserve Bank board meeting looks anti-climatic. The central bank will be looking for a rest after its busy March when it cut the cash rate to a record low of 0.25% and put in place a series of supports for the financial system to allow it to flex as pressure from the COVID-19 pandemic started slamming into it.
Read MoreThe Reserve Bank of New Zealand announced on Monday that it was planning to start buying corporate bonds from banks this week to keep business well supplied with liquidity
Read MoreNew Zealand’s Reserve Bank is starting its version of quantitative easing to buy up to $NZ30 billion of Government bonds and try and inject more cash into the banks and the economy generally.
Read MoreThe RBA has rolled out a series of measures that it hopes will help Australia “build a bridge” and eventually bounce back from the current disaster. Expect the low cash rate of 0.25% to be around for at least three years as the COVID-19 pandemic wreaks havoc on the local and global economy.
Read MoreThe Reserve Bank will leave its cash rate at the new record low of 0.25% until the economy rights itself and emerges from the COVID-19 crisis. In a coordinated response banking and financial regulator, APRA is also relaxing the current capital adequacy requirements on banks.
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The Aussie dollar fell to new 17 year lows under 60 US cents after the greenback rose and Wall Street ended the day with gains of 5%-6% after a major move by the US Federal Reserve calmed nervy investors large and small.
Read MoreThe Reserve Bank of New Zealand has joined the growing list of central banks making an emergency cut in its key interest rate on Monday morning, slashing the Official Cash Rate from 1% to a new record low of 0.25%.
Read MoreThe US Federal Reserve has slashed its key interest rate and will start a massive $US700 billion in a new round of quantitative easing to try and ease growing pressures in US financial markets caused by the growing damage the spread of the COVID-19 virus is doing in the US.
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The Bank of Canada has followed the US Federal Reserve with plans to flood its money markets with billions of dollars in extra liquidity as its markets threaten to become illiquid, like America’s main financial markets did on Thursday.
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The Federal Reserve pumped $US1.5 trillion into the US financial system on Thursday to try and provide enough liquidity to ease the stress in short-term funding and US Treasury markets.
Read MoreThe National Australia Bank now sees the Reserve Bank cutting rates to 0.25% and adopting a number of unconventional monetary policy tools to battle the impact of the rapid coronavirus-driven deterioration in both the local and global economies.
Read MoreIn a rare between official meetings move, the US Federal Reserve has cut its key interest rate by a larger than normal half a percent as the impact of the COVID-19 virus continues to roil markets and starts to damage the global economy.
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The RBA has become the first central bank to respond directly to the growing impact of the virus on economic growth, especially in China and especially after last week’s massive sell-off.
Read MoreThe NZ Reserve Bank has again left its key cash rate unchanged on 1.0% while again reserving the right to change rates, especially if the impact of China’s coronavirus crisis proves to be bigger than currently expected.
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Unless the impact of the bushfires, the coronavirus crisis in China and the general weakness in consumer spending look like they are dragging the economy lower, don’t expect any rate cuts from the Reserve Bank this year.
Read MoreThe Reserve Bank of Australia has again kept interest rates unchanged – as expected by most economists – but remains ready to reduce them if needed should the economy require it.
Read MoreBy the end of the week we should have a good idea what the RBA thinks as to where the economy is headed with several major updates to be released and two speeches from Governor Phil Lowe.
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Our high-level investment view for this year is that a combination of improving global growth-boosting profits and still easy monetary conditions will help drive reasonable investment returns, albeit more modest than the very strong gains of 2019. This note revisits five charts we see as critical to the outlook.
Read MoreAs expected the US Federal Reserve held its benchmark interest rate steady on Wednesday, as the economy stayed on a moderate growth path.
Read MoreDon’t expect the Reserve Bank to do anything to interest rates at its first meeting for 2020 next Tuesday, or for most of the rest of the year. After three rate cuts in 2019, inflation has not yet moved to the bottom of the RBA’s preferred 2% to 3% range over time.
Read MoreThe American economy and investors are in for up to two years of interest rate stability after the Federal Reserve sat pat on rates at its last meeting for 2020 and signalled no rise in 2020 and perhaps a single rise in 2021.
Read MoreNo rate cut from the Reserve Bank at its final monetary policy board meeting of the year and none is in prospect, despite the usual speculation from Paul Keating’s famed pet shop galahs among our economic commentators, business analysts, and media writers.
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