The 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.
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No 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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The health of the economy returns to the fore this week with the final meeting for 2019 of the RBA’s monetary policy board tomorrow and the September quarter’s National Accounts the day after which are forecast to show another miserable growth outcome.
Read MoreReserve Bank of Australia governor Philip Lowe has all but ruled out the chances of the central bank following the US Fed, Bank of Japan, European Central Bank and Bank of England and introducing quantitative easing (QE) in an effort to kick start inflation and boost economic activity.
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There is good reason to believe we may be close to the low in the $A (or have already seen it): it has already had a large fall; it is just below fair value; the global economic cycle is likely to turn up next year; sentiment towards the $A is very negative; and the current account is in surplus.
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Tomorrow sees RBA Governor Lowe speak on “Unconventional Monetary Policy: Some Lessons from Overseas” a speech that will focus attention on what the central bank’s monetary policy stance might look like in 2020.
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Annual wage growth hit its slowest pace in 15 months in the three months to September, completely undermining the Morrison’s government’s expectations of rising growth.
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Oops, got that one very wrong. Most NZ economists had tipped the Reserve Bank of NZ to cut its key official cash rate by 0.25% but the central bank sat pat has followed its Trans-Tasman counterpart and sat on its hands.
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China has made a small but significant trim to a key interest rate ahead of the release of the October economic data starting on Friday.
Read MoreNo rate cut from the Reserve Bank, but there was an admission that we face more than two more years of ultra low interest rates, and possibly a third because the central bank has downgraded its inflation outlook again.
Read MoreNo rate cut from the Reserve Bank at its November meeting tomorrow, but many analysts and economists believe one will come in December, and if not then, at the February meeting in 2020 (the first for next year).
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Investors, particularly Australia’s 3.8 million retirees and self-managed super-funds, should review their income-generating investment strategy in light of the Reserve Bank of Australia’s (RBA) third rate cut decision.
Read MoreReserve Bank governor Phillip Lowe has played down claims that more and more Australian homeowners are debt stressed and in trouble with their home loans.
Read MoreAs widely forecast, the Reserve Bank cut its key interest rate at yesterday’s October board meeting, setting the cash rate at a new all-time low of 0.75%, down from 1% which was the previous all-time low and again making it clear that it would continue to cut if need be.
Read MoreNo surge in housing credit, business, and personal credit were again weak – August was, in fact, a month that matched the slide in the momentum in the economy that has emerged from weak retail sales, falling car sales and other lacklustre consumption data.
Read MoreSo will the Reserve Bank cut interest rates for a third time this year at its October meeting tomorrow, or wait until Melbourne Cup day to deliver?
Read MoreThe Reserve Bank of New Zealand has left its official cash rate unchanged at a record low 1% but like its Australian counterpart, left open the chance of further cuts to try and kick start a meandering economy.
Read MoreThe RBA Governor has made it very clear that the central bank is prepared to continue cutting rates to help support “sustainable growth” while acknowledging that low-interest rates are here to stay for “an extended period” of time.
Read MoreThe Fed is not on a pre-set course, but it’s ready to act again after last night’s cut. Dow up 36.
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The US Federal Reserve cut its key interest rate by 25 basis points to a range of 1.75% to 2% early Thursday, Sydney time but left some confusion in markets as the key policy-making board split on the decision.
Read MoreThe RBA is watching events offshore closely and continues to keep the door open to further domestic easing against a backdrop of weak consumption and low wages.
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A day after its August business survey confirmed a further slowing in the pace of activity in key parts of the Australian economy, the National Australia Bank has added another rate cut forecast to its outlook.
Read MoreAs expected by the market, the Reserve Bank (RBA) kept its key cash rate steady at 1.0% in September. The bank retained an easing bias in the accompanying policy statement from Governor Phil Lowe and again indicated a willingness to cut the cash rate again should the need arise.
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Unconventional monetary policy measures could help the economy, but negative interest rates are unlikely and quantitative easing would be most effective and fairest if combined with fiscal stimulus.
Read MoreAs expected the Reserve Bank left its key cash rate on hold at 1% at the August monetary policy meeting yesterday but that doesn’t mean further rate cuts are out of the question.
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The RBA statement and their at times dovish tone saw the yield on the 10-year bond yield dip to another all-time low of 1.04%.
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We expect another one or two 0.25% cuts with the next in September but with US recession unlikely this rate-cutting cycle is likely to be limited. Fed and global monetary easing generally should help boost global growth into next year.
Read More“Uncertainties” stemming from weakness in the global economy and simmering trade tensions have seen the US Federal Reserve cut its main interest rate by 0.25% for the first time since the GFC.
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Nothing in the inflation data for the three months to June that would cause the Reserve Bank to change its approach to monetary policy.
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The June quarter and 2018-19 inflation outcomes will be out this week and with the RBA already making very clear that further rate cuts are on the cards, the data will confirm that inflation remains too low for the central bank.
Read MoreAs more and more bond yields continue to head to zero and below around the world, the more it will drag every other yield as well.
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The chances of a US rate cut seem to have improved sharply after the first of two appearances before US Congress by US Federal Reserve chair Jay Powell.
Read MoreYou can rule out an interest rate cut by the Federal Reserve at the end of this month after the much stronger than expected jobs performance of the US economy in June.
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More confirmation that the Australian economy continues to drift towards the edge of a slide with a weak retail sales reading for May and the first fall in job vacancies for over a year.
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More rate cuts are on the cards from the Reserve Bank after the central bank cut its cash rate by 0.25% for the second month in a row.
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The Reserve Bank monetary policy meeting in Darwin today will have a tiny bit of good news to consider (and ignore) – the slide in house prices again slowed last month with small rises being recorded in Sydney and Melbourne for the first time 21 months.
Read MoreThe possibility of a rate cut from the Reserve Bank tomorrow and the usual start of month data for May on trade, building approvals, and retail sales will hold the attention of local markets at the start of the 2019-20 financial year.
Read MoreIt seems Australia and NZ central banks are lockstep on monetary policy after the latest statement from across the Tasman.
Read MoreWhile the risks are higher this time around, my inclination is still to see the current period as just another global growth scare like those in 2011-12 and 2015-16 which will give way to somewhat stronger growth globally and higher share markets on a six to 12 month view.
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