RBA sees a change of air on the rate outlook | Liverpool City Champion


Economists are confident Reserve Bank of Australia Governor Philip Lowe will change his interest rate forecast after this week’s monthly board meeting following the unexpected rise in inflation.

For months, the RBA has repeatedly said it will not increase the cash rate until inflation hits its target of two to three percent on a sustained basis, which it expected. not to happen before 2024..

Last week, the annual rate of core inflation – which dampens excessive price swings and is tied to interest rate decisions made by the RBA – unexpectedly jumped to 2.1%.

This is the best result in six years and has placed it within the central bank’s target range.

Speaking the day after the inflation figures were released, during an appearance before senators, RBA Deputy Governor Guy Debelle said: “A little more inflation is welcome.”

But he declined to say what that meant for the outlook ahead of Tuesday’s board meeting and the central bank’s quarterly monetary policy statement on Friday.

“We expect the RBA to advance its forecast for the first rate hike until 2023,” AMP Capital Shane Oliver said, although he expects the first rate to be at the end of 2022. .

He also expects the central bank to cut or further cut its bond purchase scheme to $ 2 billion, from $ 4 billion as of February next year.

“However, money market expectations for the RBA to start rising by the middle of next year and for around four rate hikes until the end of next year bringing the spot rate to 1- 1.25% looks way above it, ”Dr Oliver said.

Markets were speculating on the prospect of anticipated rate hikes even before last week’s inflation figures, amid rising global oil prices and supply disruptions caused by the COVID-19 pandemic.

The first week of a new month will also bring the usual wave of economic data, which begins on Monday with house prices and mortgage loans.

Westpac economists expect the CoreLogic home value index to rise 1.4% in October from 1.5% in September, a further gradual decline from the more than 2% rate seen earlier during this year.

More generally, economists’ forecasts for mortgages, as estimated by the Australian Bureau of Statistics, indicate an increase of 1.5% for September.

The ANZ job posting series for October is also released on Monday, an indicator of future employment.

The ABS will release building permits for September on Wednesday, while on Thursday it will release international trade for the same month and retail spending for the September quarter.

Meanwhile, Australian stocks are expected to experience a positive start to the month, supported by Wall Street gains at Friday’s close, after shaking off early declines.

The Dow Jones Industrial Average rose 89.08 points, or 0.25%, to 35,819.56, the S&P 500 gained 8.96 points, or 0.19%, to 4,605.38 and the Nasdaq Composite added 50.27 points, or 0.33%, to 15,498.39.

For the month, the S&P 500 rose 6.9%, its biggest monthly gain since November 2020.

Australian equity futures followed the positive tone of the United States, rising 68 points, or 0.93%, to 7,348.

The Australian benchmark S & P / ASX200 on Friday closed 106.7 points, or 1.44%, at 7,323.7.

Associated Australian Press

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