For RBA’s Next Move on Interest Rates, Set the Alarm for July 27

By |

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.

Brexit, Election

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.”

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Top Suburbs : thebarton , st kilda west , goulburn , gladesville , menai

go back

Get help with your investment property

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 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 and appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here