-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI Podcasts -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
Commodities
Real-time insight of oil & gas markets
-
Credit
Credit
Real time insight of credit markets
-
Data
-
MNI Research
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
-
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessREPEAT: MNI STATE OF PLAY:RBA Unlikely Swayed By Negative Risk
Repeats Story Initially Transmitted at 05:30 GMT Sep 3/01:30 EST Sep 3
By Sophia Rodrigues
SYDNEY (MNI) - The Reserve Bank of Australia is unlikely to be swayed by
recent negative developments relating to political uncertainty and a risk of
wider mortgage rate rises, instead focusing on stronger economic data that
supports its gradual progress narrative for the economy.
The one-page statement following Tuesday's board meeting is likely to err
towards a positive tone, signalling a hold stance for monetary policy, with a
continuation of the guidance that the next move in interest rates is more likely
to be up expected to be recorded in the meeting minutes due Sep 18.
The cash rate is expected to be left on hold at 1.5% for the twenty-third
consecutive meeting.
--POLITICAL UNCERTAINTY
Local politics is a key emerging risk in Australia following the recent
leadership change that saw ex-Treasurer Scott Morrison replace Malcolm Turnbull
as Prime Minister.
Initially it appeared that the change has removed considerable political
uncertainty until the next election that must be held by May 2019. However,
reports of continuing divisions within the Liberal party and overall negative
coverage of the political landscape leaves the outlook cloudy, leaving the
Australian dollar on a downtrend, with local politics among reasons contributing
to the decline.
Australia has been witness to much political drama in recent years, with
six prime ministers in a decade. Markets have been largely immune to change, but
this time may be different.
The main risk is a hit to business confidence, currently at elevated levels
and seen as a key reason for the RBA's positive outlook on the economy.
With the RBA unlikely to comment directly on political risk, simply
bunching it under the various uncertainties to the outlook, impact on monetary
policy appears limited for now.
--MORTGAGE RATE RISE
The risk of widespread mortgage rate rises have increased following
Westpac's surprise 14 basis point hike in its variable loan rates, along with
increases for several other mortgage products. The other three big banks have
yet to announce similar moves and the RBA is unlikely to react to just one such
announcement.
Even if other big banks were to lift their mortgage rates, the RBA may not
react until it assesses how the hikes are impacting both the housing market and
household consumption. For now, the RBA will take comfort from the fact that the
easing in housing market activity has been orderly and it was long overdue. The
central bank will again point out that the average mortgage rate paid remains
lower than a year ago.
--LABOR MARKET OUTLOOK
The overall statement is likely to be little-changed from August, with the
main positive being the fall in the jobless rate to 5.3% in July and a slight
acceleration in wage price index.
The Q2 business indicators data also showed wages and salaries rose 1.2%
q/q compared with a 0.9% rise in Q1. As a measure of wage bills, this points to
a rise in household income.
The RBA is also likely to state that recent data have been consistent with
the central forecast for GDP to be a touch above 3% in 2018 and 2019.
--LOWE SPEECH
If there's any acknowledgment to evolving negative risks, Governor Philip
Lowe may mention it during Tuesday's board dinner speech.
Any change in the RBA's current guidance would be a big shift and Lowe may
not be wanting go there yet. However, he might be prepared to highlight the
conditionality for the guidance.
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.