For the next move on Australian interest rates, it all comes down to the quarterly inflation report on July 27.
Governor Glenn Stevens concluded his policy statement Tuesday saying “further information should allow the board to refine its assessment of the outlook for growth and inflation, and to make any adjustment to the stance of policy that may be appropriate.” Most economists interpreted that as meaning the second-quarter consumer-price index is key.
Stevens next meets to set rates on 2 August.
National Australia Bank Ltd. reckons a quarterly core inflation reading below 0.4% is needed to trigger a cut in the benchmark rate, which was kept at 1.75% Tuesday.
Westpac Banking Corp. estimates the data should come in closer to 0.3% and annual underlying inflation slowing to 1.3%, a fresh record low that it said would “clearly seal the deal on an August move.”
The Reserve Bank of Australia has left borrowing costs unchanged at the record-low 1.75% or the past two months -- a period that encompassed a domestic election campaign and the U.K.’s vote on Europe -- after easing in May in response to very weak first-quarter inflation.
The RBA will also update its quarterly forecasts for inflation and growth in time for the August policy meeting, and these will be available to the board. As an inflation-targeting bank, the RBA tends to move in response to the latest CPI data.
In his statement Tuesday, Stevens acknowledged Britain’s vote to quit the European Union, but largely dismissed its impact on Australia. He also held back on Australia’s indecisive election result, where counting continues and a second hung parliament in six years is a possibility.
Australia’s economy has been supported by a weaker currency and record-low rates that lifted growth and held unemployment lower than the RBA forecast. But the political limbo, core inflation and wage growth at record lows and a stronger Aussie dollar since June are the flip-side to that story.
The Australian dollar rose immediately after the rate decision, then pared those gains, and traded little changed at 75.20 U.S. cents at 5:53 pm in Sydney. It’s been supported by a rising reluctance on the part of the Federal Reserve to raise rates following the Brexit vote, which spurred a wave of global market turmoil.
Stevens said on Brexit that: “Any effects of the referendum outcome on global economic activity remain to be seen and, outside the effects on the U.K. economy itself, may be hard to discern.”
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now
Top Suburbs :
east victoria park
Get help financing your investment
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.
We value your privacy and treat all your information seriously - you can check out