RBA Holds Nerve on Rates, Waits to See Which Way Consumers Jump
Tuesday, 5 March 2019 11:13 WIB | FISCAL & MONETARY |RBA

Australia™s central bank held its nerve in the face of a credit squeeze and tumbling property prices, keeping interest rates unchanged as it waits to see how consumers respond.

Governor Philip Lowe and his board kept the cash rate at 1.5 percent Tuesday -- as expected by money markets and economists -- saying in a statement: œthe main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling housing prices in some cities.

The Australian dollar was little changed, buying 70.84 U.S. cents at 2:33 p.m. in Sydney compared with 70.77 before the decision.

The Reserve Bank is under mounting pressure to end a 2-1/2 year pause in rate cuts amid signs consumers are hunkering down in response to a property slump. Sydney house prices have fallen 13 percent from a mid-2017 peak and bank lending is the weakest since the 1980s. But Lowe is taking heart from strong hiring and low unemployment, and holding out for Wednesday™s GDP report to gauge the state of consumption.

Australian unemployment has fallen to 5 percent as firms continue to hire and invest with interest rates at a record low. Indeed, the economy is in an unusual divide: solid jobs, investment and growth on one hand; with weak lending, a slumping housing market and faltering consumption on the other.

œDemand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed, Lowe said. œGrowth in credit extended to owner-occupiers has eased further.

The RBA has run easy policy to try to tighten the labor market sufficiently to spur wage growth and inflation. Core consumer-price gains have failed to reach the lower end of the central bank™s 2-3 percent target for the past three years.

The global backdrop looks more optimistic as the U.S. and China appear to be closing in on a trade deal. But the latter™s growth is slowing, which only adds to the clouds over the outlook Down Under. At the same time, the Aussie dollar has provided some stimulus by declining about 9 percent over the past year.

The economy is forecast to grow 0.4 percent in the final three months of 2018 from the prior quarter and 2.6 percent from a year earlier -- a reasonable result but not sufficient to further reduce spare capacity in the labor market. Prior to the report, Lowe is due to speak in Sydney on the housing market.

Source : Bloomberg

RELATED NEWS

Fed Makes Second Straight Rate Cut, Splits on Further Action
Thursday, 19 September 2019 01:20 WIB

Federal Reserve policy makers lowered their main interest rate for a second time this year while splitting over the need for further easing, caught between uncertainty over trade and global growth and a domestic economy that's holding up well. œ Although household spending has been rising at a st...

RBA Sees Risk of Property-Price Spike as House-Building Dwindles
Tuesday, 17 September 2019 09:03 WIB

Australia's central bank said there's potential for an upswing in home prices as dwelling construction weakens, while reiterating it's prepared to lower interest rates further. In minutes of its Sept. 3 policy meeting released in Sydney Tuesday, the Reserve Bank also noted that "the upward trend in...

ECB Cuts Rates, Restarts QE to Fight Slowdown as Draghi Era Ends
Thursday, 12 September 2019 19:18 WIB

The European Central Bank cut interest rates further below zero and said it™ll resume bond purchases as President Mario Draghi overcame critics of his stimulus policies to make a final run at reflating the euro-area economy. The Governing Council reduced the deposit rate to mi...

Powell says August job report is sign of continued strength in labor market, doesn't see a recession
Saturday, 7 September 2019 01:23 WIB

Federal Reserve Chairman Jerome Powell said Friday afternoon that the most recent monthly gauge of the U.S. labor market fit into an overall picture of a healthy jobs market and economy. In a question-and-answer session in Zurich, Powell said the outlook for the economy remains favorable, describin...

Carney speech: Worst-case Brexit scenarios now less severe than 2018
Wednesday, 4 September 2019 20:51 WIB

While testifying before the Treasury Committee as part of the Bank of England (BOE) inflation report hearings, Governor Mark Carney said that their worst-case Brexit scenario was less severe than last year's forecast and added that the worst-case Brexit outcome was now expected to cause a 5.5% drop ...

ANOTHER NEWS
Hong Kong Shares Fall For Third Day
Thursday, 19 September 2019 03:32 WIB Hong Kong stocks finished Wednesday with losses, extending a sell-off to a third day as traders fret over the impact of protests on the city, while they are awaiting a key Federal Reserve policy decision later in the day. The Hang Seng Index eased...

DISCLAIMER

Seluruh materi atau konten yang tersaji di dalam website ini hanya bersifat informatif saja, dan tidak dimaksudkan sebagai pegangan serta keputusan dalam investasi atau jenis transaksi lainnya. Kami tidak bertanggung jawab atas segala akibat yang timbul dari penyajian konten tersebut. Semua pihak yang mengunjungi website ini harus membaca Terms of Service (Syarat dan Ketentuan Layanan) terlebih dahulu dan dihimbau untuk melakukan analisis secara independen serta memperoleh saran dari para ahli dibidangnya.