Breaking News
Investing Pro 0
Free Webinar - The Role of Psychology in Trading - Thursday, December 8, 2022 | 04:00PM EST Enroll Now

Australia central bank likely on hold in September, rates seen at 0.5% by early 2020: Reuters poll

Economy Aug 28, 2019 03:41AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
GS
-0.51%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BARC
-0.41%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
STAN
+1.23%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Swati Pandey

SYDNEY (Reuters) - Australia's central bank is all but certain to keep its cash rate at a record low of 1% next week though it will likely cut again two more times to boost inflation and support a stuttering economy, a Reuters poll showed.

The Reserve Bank of Australia (RBA) chopped its benchmark rate twice since June with an eye on unemployment which is slowly ticking higher. The cuts have prompted banks to lower mortgage rates, helping spark a welcome revival of the country's subdued housing market.

The government of Prime Minister Scott Morrison has also chimed in, offering tax rebates to millions of households in a bid to spur consumer spending.

Still, economists and rates futures forecast more monetary stimulus, though not immediately.

All but one of 36 economists surveyed over the past week expect the RBA to hold the cash rate at its Sept. 3 monthly meeting. Barclays (LON:BARC) was the outlier, predicting a cut to 0.75%.

An overwhelming majority, or 32 of 36 surveyed, see at least one cut to 0.75% in the final quarter of this year compared with 27 of 40 economists in the July poll.

The cash rate is widely seen at 0.5% by early next year - a level considered to be the floor for the RBA. In the July poll, Standard Chartered (LON:STAN) and Goldman Sachs (NYSE:GS) were the only two banks to predict rates at 0.50%.

Cementing that view, RBA Deputy Governor Guy Debelle said on Tuesday the bank would consider unconventional monetary options if the cash rate was cut to 0.5% though he hoped such heavy policy adjustments would not be needed.

As a result, more than 80% of those polled, or 29 of 35, predict policy at 0.5% until end-2020.

"The probability of other (unconventional) measures next year is rising," AMP chief economist Shane Oliver said.

"Negative interest rates are unlikely but quantitative easing would likely be included. Ideally this would involve working with the government to provide a fiscal boost."

Australia's A$1.9 trillion economy likely completed its 28th year of recession-free expansion last quarter, the longest boom among developed countries. But economic risks have intensified over the past year, with growth slowing, inflation lukewarm, property market shaky and unemployment ticking higher.

The RBA expects the economy to start generating wage pressures only when unemployment falls to 4.5% or below from 5.2% now.

"Low wages growth present a challenge for the RBA to be able to hit its 2-3% inflation target," said HSBC chief economist Paul Bloxham. "Our central case sees further RBA cuts in the coming quarters."

Australia central bank likely on hold in September, rates seen at 0.5% by early 2020: Reuters poll
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email