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RBA Dated OIS Reacts To RBA Kent Speech On Policy Lags

STIR

In a speech titled “Long and Variable Monetary Policy Lags” at the KangaNews DCM Summit, RBA Assistant Governor Kent stated that:

  • “the lagged effect of the cash flow channel of monetary policy is likely to be somewhat elongated currently due to the high proportion of fixed-rate loans and sizeable buffers held by many borrowers.”
  • “…it’s likely to take longer than usual to see the full effect of higher interest rates on household cash flows and household spending.” and
  • “There is no reason to think that other channels of monetary policy are more or less effective than usual.”
  • RBA dated OIS pricing is little changed for the April meeting (flat) but firmer by 9-17bp for meetings beyond June.
  • The market continues to believe the peak in the cash rate for this cycle has been seen with 28bp of easing now priced for year-end.

Figure 1: RBA Dated OIS: Today Vs. Friday

Source: MNI – Market News / Bloomberg


Figure 2: RBA Dated OIS: Today Vs. Friday


Source: MNI – Market News / Bloomberg

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