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By Swati Pandey
SYDNEY (Reuters) – The Australian central bank is expected to keep rates at all-time highs until 2021, a Reuters poll found Friday. a rate hike earlier.
The Reserve Bank of Australia (RBA) broke its record of stable rates in December by maintaining its policy at 1.50% for a 28th consecutive month.
Economists are now waiting for this period of inaction to continue for a long time.
The latest poll shows a median prediction of the absence of rate changes until the third quarter of 2021. Only six respondents expect an increase by March 2020, compared to 11 in the previous survey.
The change in perspective follows disappointing data on the third quarter's GDP in December, while retail sales – an indicator of consumer health – remained subdued.
The dismal reading of the economy, coupled with the latest signal from the US Federal Reserve that it will put a pause in future rate hikes, has led the market to completely eliminate the chances of local tightening.
Instead, investors are now taking a discount.
The market now sees an 80% probability that the RBA will reduce the key interest rate to 1.25% by April 2020.
Commenting on next week's RBA will therefore be instrumental in enabling investors to determine at least the direction that the policy is likely to take in the near term.
"To say that a lot of attention is given to the coming week is a euphemism," ANZ economists said in a note.
RBA Governor Philip Lowe will deliver his first speech of the year on February 6, a day after the board meeting, while the RBA will release its quarterly economic outlook on February 8.
"We believe that the bank will revise its growth forecasts, but will maintain a positive outlook in the medium term," they added.
"This should let him continue to express the opinion that the next rate change will probably be on the rise, at some point.But the bank has a lot to take into account, so a neutral position change can not be excluded."
(Report by Swati Pandey, edited by Sam Holmes)
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