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VIEW: CBA Now Look For November Move

RBA

CBA now think fresh RBA easing will come in November. At the November meeting they expect: "a cut in the cash rate target, term funding facility (TFF) rate and 3 year bond yield target to 0.1% (from the current 0.25%). The interest rate on Exchange Settlement Balances will need to be reduced, we expect this to be cut to 0.05% (from the current 0.1%). Following comments in the Q&A session it is also likely that the RBA will announce their intention to purchase more government bonds in the 5‑10 year part of the interest rate curve. The Governor highlighted that interest rates in these maturities are higher than in other countries. Lower bond yields will have the first round effect of reducing interest costs for the government as they continue to provide a massive amount of fiscal support to the economy…The Governor also out outlined a subtle but important change to the operation of monetary policy with regards to the inflation target. Going forward the RBA will place a greater weight on actual, not expected inflation outcomes. In the current environment of below target inflation this means that monetary policy stimulus is likely to stay in place for even longer."

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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