Paramilitary police officers stand guard in front of the headquarters of the People’s Bank of China, the central bank (PBOC), in Beijing, China September 30, 2022. REUTERS/Tingshu Wang/File Photo Acquire Licensing Rights
Sept 15 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.
Asian markets are set to end the week strongly following risk-friendly moves in the U.S. and Europe on Thursday, although a deluge of top-tier economic data from China on Friday could sour the mood at a stroke.
The latest indicators from the region’s largest economy to be released include house prices, fixed asset investment, retail sales, industrial production and unemployment, all for August.
The annual pace of retail sales and industrial production growth is expected to pick up, but fixed asset investment growth is predicted to slow to a new low of 3.3% going back to the 1990s, if pandemic-related distortions in early 2020 are excluded.
The People’s Bank of China insists it will take “appropriate” steps to support the economy, although a growing number of economists are skeptical Beijing will meet its 5% GDP growth target this year and many are cutting their 2024 outlooks.
The PROC on Thursday announced its second 25-basis point cut to banks’ reserve requirement ratio this year. Unsurprisingly, the move stopped the yuan’s recent mini-revival in its tracks, and pressure on the currency on Friday will probably be to the downside again.
China’s deteriorating trade relations with the West, meanwhile, is a darkening cloud that shows no sign of lifting.
Beijing has hit back at a European Commission probe into China’s electric vehicle subsidies as protectionist, warning it would damage economic relations, and analysts have warned that if the probe results in punitive tariffs, Beijing will take retaliatory action.
However, all that could be parked for another day if investors decide to run with Thursday’s bullish momentum.
It was a case of ‘good news is good news’ for Wall Street as investors welcomed hot U.S. retail sales and accelerating producer prices as a sign of economic resilience rather than fret about the hawkish rate implications.
Coupled with falling euro zone bond yields and implied rates after the European Central Bank’s ‘dovish hike’ – perhaps the central bank’s last in the cycle – risk assets got a shot in the arm, paving the way for a positive open in Asia on Friday.
The big three U.S. indexes rose between 0.8% and 1.0%, European stocks had their best day in six months and the MSCI Asia ex-Japan Index had its best day in 10 days on Thursday. The rise in oil to new 2023 highs and another dollar surge failed to dampen investors’ mood.
Another positive portent for Asian markets on Friday: the VIX gauge of implied S&P 500 equity volatility – Wall Street’s so-called ‘fear index’ – registered its lowest close on Thursday since before the pandemic.
Here are key developments that could provide more direction to markets on Friday:
– China ‘data dump’ (August)
– Indonesia trade (August)
– New Zealand manufacturing PMI (August)
By Jamie McGeever; Editing by Josie Kao
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
SYDNEY, Sept 1 (Reuters) – Australia’s home prices rose in August for a sixth straight month as a jump in new listings was absorbed by strong demand, adding to signs that the recovery in the property market is becoming entrenched.
Data from property consultancy CoreLogic showed on Friday prices nationally rose 0.8% in August from July, accelerating from a rise of 0.7% in the earlier month. Since finding a floor in February, national prices have risen 4.9%, following a 9.1% decline from their peak in April last year.
The recovery has been led by Sydney and Brisbane where prices jumped 1.1% and 1.5% respectively.
Regional markets, where there is usually less demand from overseas migration, eked out a gain of 0.1% in August, while the housing values in capital cities across states and territories rose 1%.
The Reserve Bank of Australia (RBA) has jacked up interest rates by a whopping 400 basis points since May last year to tame inflation, but housing prices found a bottom earlier than expected due to short supply and surging migration levels.
Markets are wagering the tightening cycle might now be over, with another hike priced at only a 40% chance. That expectation has also underpinned gains in the property market.
CoreLogic research director Tim Lawless attributed the gains to lower-than-average advertised supply levels.
“The balance between advertised supply and demonstrated demand will be a key factor influencing housing market outcomes in spring,” said Lawless. “A rise in fresh supply without a commensurate lift in purchasing activity would likely take some heat out of the pace of capital gains.”
There are also signs that rents, which have risen for a 36th consecutive month and added to inflation, may be peaking. National rents rose 0.5% in August, the smallest gain since November 2020, according to CoreLogic.
Reporting by Stella Qiu; Editing by Lincoln Feast.
Our Standards: The Thomson Reuters Trust Principles.
A sign is seen outside the 11 Wall St. entrance of the New York Stock Exchange (NYSE) in New York, U.S., March 1, 2021. REUTERS/Brendan McDermid Acquire Licensing Rights
A look at the day ahead in U.S. and global markets from Mike Dolan
World markets stayed remarkably buoyant even as the chances of one more U.S. interest rate hike have moved firmly onto the radar, with China’s bourses extending Monday’s rally and the state of U.S. employment now top of mind.
For the first time since before the regional banking crisis in March, U.S. futures now see more than a 50% chance of yet another Federal Reserve rate rise to 5.5-5.75% – where the median of Fed policymaker forecasts from their June meeting still lies. Early Tuesday, futures priced almost a two-thirds chance of that additional quarter-point move in November.
After almost two months of stability in assuming peak rates would be where they are now, the chances of another tightening have been creeping higher again over the past 10 days and appear to be cementing following Fed Chair Jerome Powell’s relatively hawkish speech at Jackson Hole on Friday.
And yet – perhaps with the uncertainty dissipating, the economy still robust and bond markets better priced – world markets appear to be taking the tighter odds in their stride.
Wall St’s S&P500 (.SPX) clocked only its second-consecutive gain of the month so far on Monday, while MSCI’s all-country index (.MIWD00000PUS) is on course for its sixth gain in seven trading days.
More impressively in the circumstances, restive bond markets calmed down and bond yields continued to dial back from their highest in over a decade last week. Two-year Treasury yields fell back below 5%, with 10-year yields eyeing their lowest in almost two weeks at 4.17% and equity risk gauges such as the VIX (.VIX) of implied volatility touching two-week lows too.
The dollar (.DXY) was firm, but stayed off last week’s near three-month high.
With the Atlanta Fed’s real-time estimate of quarterly real GDP growth running as high as 5.9% – about 9% in nominal terms – the Fed will likely need to see some considerable softening of incoming economic data to prevent it moving again.
This week the onus falls largely on the labor markets, with the national payrolls report due Friday but with July readings on job openings due later on Tuesday – alongside August consumer confidence numbers and June house price data.
Friday’s August payrolls report is expected to show a slowdown in monthly hiring to about 150,000 but an unchanged unemployment rate of just 3.5%.
Overseas, China’s embattled stock markets managed to advance for a second day – lifted by a series of support measures and hopes of some detente in the economic and financial standoff between Washington and Beijing amid a three-day visit to China by U.S. Commerce Secretary Gina Raimondo.
Although it gave back the bulk of Monday’s 5% early surge by the close of business, China’s CSI300 (.CSI300) push 1% higher again on Tuesday after weekend measures to slash stamp duty on stock purchases and limit new stock listings. With tech and healthcare sectors leading the way, foreigners were net buyers again on Tuesday.
Just how cash-strapped embattled Country Garden Holdings (2007.HK) is will be the focus when China’s largest private property developer is due to report its first-half results on Wednesday.
Asia bourses more widely and European indices were higher, while Wall St futures were flat ahead of the open.
Tropical Storm Idalia closed in on Florida’s Gulf Coast on Tuesday after skirting past Cuba, headed for a U.S. landfall as a powerful Category 3 storm, prompting authorities to order evacuations of vulnerable shoreline areas.
Events to watch for on Tuesday:
* U.S. August consumer confidence, July JOLTS job openings data, June house prices, Dallas Fed Aug service sector survey
* Federal Reserve Vice Chair for Supervision Michael Barr speaks
* U.S. Treasury auctions 7-year notes
* U.S. corporate earnings: Best Buy, HP, JM Smucker, Catalent, Pinduoduo
By Mike Dolan, editing by Susan Fenton <a href=”mailto:mike.dolan@thomsonreuters.com” target=”_blank”>mike.dolan@thomsonreuters.com</a>. Twitter: @reutersMikeD
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
A look at the day ahead in U.S. and global markets from Mike Dolan, Editor-at-Large, financial industry and financial markets
As investors switch attention to the health of the U.S. consumer, a funk in China’s economy, markets and currency appeared to deepen and emerging market ructions spread.
After another disappointing reading for industrial production and retail sales this month, China’s central bank scrambled to cut 1-year lending rates by 15 basis points to 2.50% – the second cut in policy rates in three months – and sent the yuan sliding to 2023 lows against the dollar.
China stocks fell again (.CSI300) and 10-year government bond yields fell to three-year lows.
Perhaps more worrying for those fretting about the broader stability of China’s economy, the corrosive real estate bust saw property investment fall for the 17th straight month amid creeping deflation fears and the government suspended publication of spiralling youth unemployment rates.
The contrast with the U.S. picture is stark right now.
The ongoing reassessment of the U.S. economy now has as many as three in four fund managers around the world assuming there will either be a soft landing or even no landing for the economy over the next 12 months, according to Bank of America’s latest monthly investor poll.
As cash holdings have been reduced in August, asset managers have reduced their underweight equity positions and, rather surprisingly given the hit to bond prices this month, upped global bond allocations to a net 5% overweight. The latter is now some 2.2 standard deviations above long-term averages.
And yet, in part due to a rethink of the long-term sustainable interest rate over the horizon, long-term U.S. Treasury yields continue to climb – even in tandem with a tech-led rebound in stock prices (.SPX) on Monday. Ten-year Treasury yields hit their highest for the year at 4.23%.
With inflation expectations subdued , 10-year inflation-adjusted Treasury yields hit their highest in 14 years at 1.87% – with eyes now trained on any long-term Fed guidance from its annual Jackson Hole conference later this month.
A combination of rising real U.S. yields and robust readings for the U.S. economy – which should be reinforced by the July retail sales report on Tuesday – and increasingly turbulence in China and many emerging economies is supercharging the dollar in many quarters.
Despite news of forecast-beating accelerating growth in Japan in the second quarter, the yen skidded to its lowest in 10 months on Tuesday alongside the yuan slide.
Elsewhere in the so-called BRICS emerging economies – the grouping of Brazil, Russia, India, China and South Africa – the dollar was also in command.
Isolated economically and financially from the West for over a year after its invasion of Ukraine, Russia raced to shore up its plummeting rouble on Tuesday with an emergency interest rate hike of 3.5 percentage points to 12% – with only modest success so far.
Jarred by the surprise emergence of a far-right presidential candidate in Argentina’s primary elections – who has an agenda to dollarize the hyperinflation-dogged economy – the peso was devalued again on Monday. Argentina’s incumbent government wants to join the BRICS grouping too.
And even India’s rupee was on the slide to a 10-month low.
Back stateside, the retail sales report will be accompanied by an earnings update from Home Depot – the first of the big retailers to report this week. Housing market sentiment indicators are also out.
S&P500 futures were off a touch before the open.
Events to watch for on Tuesday:
* U.S. corporate earnings: Home Depot, Agilent Technologies, Cardinal Health, Jack Henry
* U.S. July retail sales, July import/export prices, NAHB August housing index, NY Fed August manufacturing, June TIC data on Treasury holdings, June business inventories; German August ZEW investor survey; Canada July inflation, home sales and June manufacturing
* Minneapolis Federal Reserve President Neel Kashkari speaks
By Mike Dolan, editing by Susan Fenton; <a href=”mailto:mike.dolan@thomsonreuters.com” target=”_blank”>mike.dolan@thomsonreuters.com</a>. Twitter: @reutersMikeD
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
A man wearing a face mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a novel coronavirus outbreak, at the Pudong financial district in Shanghai, China February 28, 2020. REUTERS/Aly Song
Aug 14 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.
Asian markets will get key economic signals this week that could determine monetary policy in the continent’s two biggest economies – retail sales and industrial production and house prices from China, and Japanese GDP and inflation.
Markets also will watch for interest rate decisions from New Zealand and the Philippines, inflation figures from India and major corporate earnings reports from China, including Tencent, Lenovo CNOOC and JD.com.
The biggest fireworks on Monday’s economic data calendar could come from India. Annual consumer price inflation is expected to show a sharp rebound in July to 6.40% from 4.8%, and a slowdown in wholesale price deflation to -2.4% from -4.1%.
The wider market mood will likely be one of caution after last week – the Nasdaq posted its first back-to-back weekly decline of the year, and the MSCI Asia ex-Japan equity index lost 2% on its way to a one-month low.
Caution may morph into outright gloom on Monday, however, after China’s biggest privately-owned developer Country Garden said it will suspend trading of its 11 onshore bonds.
The firm’s shares are at a record low, it didn’t pay two dollar bond coupons due on Aug. 6 totalling $22.5 million, it has liabilities of around $200 billion and last week warned it could report a loss of up to $7.6 billion for the first half.
Investors are wondering how long Beijing will resist pressure to inject any kind of stimulus into an economy that is now officially in deflation with the weakest credit impulse since 2009.
Another batch of sub-par data this week could force authorities’ hand.
Investors and the Bank of Japan, meanwhile, will be paying close attention to Japanese inflation data later in the week. Economists polled by Reuters expect the annual rate of core CPI inflation to slow to 3.1% in July from 3.3% in June.
A lower print could tempt the market to price in a more gradual change to the BOJ’s ‘yield curve control’ policy, stickier inflation could have the opposite effect.
Either way, the yen will be under scrutiny – it slumped to a 15-year low against the euro lat week and is flirting with levels against the dollar that last year prompted massive yen-buying intervention from Japanese authorities.
Asian stocks have badly underperformed this year, largely due to worries over China which is battling weak growth, deflation, and capital outflows. Chinese blue chip stocks are flat this year and Hong Kong’s Hang Seng index is down 4%.
The MSCI Asia ex-Japan equity index index has now fallen two weeks in a row for the first time since April, and is up only twice in the last eight weeks.
Here are key developments that could provide more direction to markets on Monday:
– India consumer inflation (July)
– India wholesale inflation (July)
– Germany wholesale inflation (July)
By Jamie McGeever; editing by Diane Craft
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Good morning, it’s Ainslie and Matt here for the first day of August. The RBA meets later today, but first…
Today’s must-reads:
• House price growth decelerated in July
• China’s lagging growth
• Futures point to positive open
Australia’s house price growth slowed in July as property listings increased, suggesting sellers are taking advantage of current market strength, including those struggling to meet their obligations after rapid interest-rate increases. Mortgage holders may feel more pain with economists and money markets divided over whether the Reserve Bank of Australia will lift rates at its meeting later Tuesday.
Australian equities futures are pointing to a strong open, after
global stocks finished higher in the final day of July. The S&P 500 notched its longest streak of monthly gains since August 2021, defying worries about an overheated market.
Economic growth in Australia’s biggest trading partner, China, is fading after decades of supercharged expansion. A much-anticipated post-pandemic recovery appears to have flopped, with data flashing warning signs across the economy. This time, the government’s traditional tools for reversing course may not be viable options. In the Bloomberg Originals mini-documentary China’s Great Slowdown, we look at why China’s slowdown could send ripples around the world.
Waste from winemaking may have uses in supplements, according to research from Monash University. Researchers found compounds in wine byproducts in can be made into a liquid that tastes and smells like a weak grape juice, and may have some health benefits. The polyphenols, which include things like resveratrol, and anthocyanins have been associated with protecting against health issues ranging from cancer to cardiovascular diseases and diabetes in some preliminary studies.
Up Next
House Price Growth Slows: Australia Briefing
SYDNEY: Australia’s house prices climbed at a slightly slower pace in June while still performing strongly in key cities, as sentiment shows signs of easing on the prospect of further interest rate increases.
The bellwether Sydney market advanced 1.7% and Brisbane by 1.3%, resulting in a 1.2% gain in Australia’s major cities, data from property consultancy CoreLogic Inc showed yesterday.
A lack of supply has been the main driver of prices, CoreLogic said.
“Higher interest rates and lower sentiment will likely weigh on the number of active home buyers, helping to rebalance the disconnect between demand and supply,” said Tim Lawless, research director at CoreLogic.
Prices rebounded earlier this year as a combination of limited supply, renewed immigration and signs the Reserve Bank of Australia (RBA) was nearing the end of its tightening cycle bolstered demand.
The RBA, after pausing in April, resumed raising rates and has warned there may be more hikes to come as it tackles inflation.
Sydney has led the revival in the housing market, climbing 6.7% from a January trough, with the city’s median home value rising at about A$4,262 (US$2,828 or RM13,186) a week, Lawless said.
The island state of Tasmania’s capital, Hobart, was the only city to record a fall in prices last month, down 0.3%.
The housing shortage and revival of prices have also driven up rents, with reports of prospective tenants bidding up prices in order to secure a property.
CoreLogic said that while rental conditions “remain diverse across the nation,” there is growing evidence that rental growth is easing.
The national rental index increased a further 0.7% in June, holding well above the pre-Covid decade average monthly gain of 0.2%, but with a deceleration and the smallest monthly increase since January this year.
Despite tight vacancy rates, “it’s likely the trend in rental appreciation will continue to moderate, simply due to rental affordability pressures forcing a change in rental household formation,” Lawless said. — Bloomberg
Finance guru Mark Bouris has predicted besieged homeowners may be forced to sell in a “fire sale” as high interest rates “start to bite in”.
Yellow Brick Road Home Loans Executive Chairman Mark Bouris predicts property prices will not continue to rise at the rate they are.
Mr Bouris says he is expecting the housing supply to increase during the spring period as people feel the full effect of interest rate rises.
“People are hanging out to see whether or not this rhetoric which we’re hearing at the moment, ‘oh, house prices are going to go up’, before they sell,” Mr Bouris told Sky News Australia.
“If they don’t see that period, they’re going to have to sell, and they’re going to sell to a big supply market.”
Last week, the former host of The Celebrity Apprentice Australia said he was “filthy” after the Reserve Bank (RBA) chose to increase interest rates a further 25 basis points to 4.1 per cent, warning the move is the “nail in the coffin” for besieged homeowners.
During an appearance on Sky News Australia with Peter Stefanovic on Wednesday morning, Mr Bouris doubled down on his criticism of the RBA and revealed he does not expect housing prices to increase.
Mark Bouris has continued to sound the alarm on Australia’s housing woes. Image: Sky News Australia.
The Yellow Brick Road Home Loans Executive Chairman explained the first factor that supports rising property values is when “demand outstrips supply”.
“Usually increases in demand are caused by more affordability and more affordability is caused when interest rates fall,” he said.
“The second thing that can create house price increases is if supply stays the same, in other words very low.
“I’m expecting supply to increase because we’ve had a low supply of housing over the last six months (and) when supply increases house prices tend to go down not up.
“The reason I think housing supply will increase is because the fixed rates will start to bite in,” he warned.
“A fire sale?” Stefanovic asked.
“Yeah, correct.”
‘Harder and harder’: Young people struggling to get into housing market
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Mr Bouris said he is expecting the housing supply to increase during the “spring period” as people feel the full effect of interest rate rises and more households transition from fixed to variable interest rates.
“People are hanging out to see whether or not this rhetoric which we’re hearing at the moment, ‘oh, house prices are going to go up’, before they sell,” Mr Bouris said.
“If they don’t see that period, they’re going to have to sell, and they’re going to sell to a big supply market.”
“I’m expecting house supply to increase because the fixed sales are going to set in and a lot of agents are telling me people are hanging out they’re going to sell into a big supply crisis.
NAB predicts that the RBA may increase interest rates to 4.6 per cent by August. Picture: NCA NewsWire/Joel Carrett
Stefanovic then asked Mr Bouris what will happen if the RBA chooses to increase interest rates further in line with predictions by major banks.
On Tuesday, NAB revised its forecast for interest rates and predicted the official cash rate will reach 4.6 per cent by August.
“If you put interest rates up two more times, like NAB is suggesting, then totally you’re going to get this position where affordability is non existent and those people who currently have a home loan are going to be in a lot of strife,” he said.
In this episode, Smart Property Investment’s Phil Tarrant and Finni Mortgages’ chief executive, Paul Glossop, talk about the central bank’s move to take another swipe at inflation, how mortgage holders are being caught in the crossfire and why they think borrowers are not completely “out of the woods” just yet.
While the duo acknowledge it will take a longer time for the rate rise cycle to reach its last stop, they explore the different ways borrowers can find reprieve amid the rising mortgage squeeze — including a modified serviceability assessment rate offered to those who have a good track record among lenders.
Lastly, they advise property owners to focus on “longevity”, explain why one’s borrowing capacity is “just one aspect” of the equation, and discuss the importance of “stress testing” your personal cash flow.
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The Reserve Bank of Australia (RBA) has lifted the cash rate by 25 basis points (bps) to bring the official cash rate to 4.1 per cent from 3.85 per cent. This is now the 12th cash rate hike since the RBA began raising rates in May 2022.
This is the first time the official cash rate has sat above 4 per cent since April 2012, when it was at 4.25 per cent.
RBA governor Philip Lowe said on the decision: “The Board is still seeking to keep the economy on an even keel as inflation returns to the 2–3 per cent target range, but the path to achieving a soft landing remains a narrow one. A significant source of uncertainty continues to be the outlook for household consumption.”
“The combination of higher interest rates and cost-of-living pressures is leading to a substantial slowing in household spending. Housing prices are rising again and some households have substantial savings buffers, although others are experiencing a painful squeeze on their finances.”
Mr Lowe continued: “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve.
“The Board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”
CreditorWatch chief economist Anneke Thompson said the RBA lifted the cash rate in an effort to combat services side inflation “despite clear signs that the Australian economy is well and truly into its necessary slowdown”.
“There were one off reasons for the high inflation figure, such as the fuel excise tax being halved in April 2022, that contributed, however, overall, it would appear that inflation is not falling fast enough for the RBA to be comfortable with,” Ms Thompson added.
PropTrack senior economist Eleanor Creagh said: “The pipeline of wage increases in the public sector and minimum wage decision are expected to maintain wages pressure, potentially fuelling inflation to remain elevated.
“The risk of a wage-price spiral is an ongoing concern for the central bank.”
CoreLogic Australia head of research Eliza Owen said: “A mix of outcomes across economic data through the month created another ‘line-ball’ call for the outlook in the cash rate.”
“Adding to uncertainty around interest rate decisions is the housing market dichotomy.
“CoreLogic’s Home Value Index accelerated in May, rising 1.2 per cent nationally and while established home and residential land values do not directly feed into the CPI housing indicator, there may be upside risk to inflation from rising home prices due to potential wealth effects,” Ms Owen added.
Commonwealth Bank of Australia (CBA) head of Australian economics Gareth Aird said the central bank’s tightening cycle has been “incredibly aggressive”.
“The Board has delivered 400bp of rate hikes since May 2022.
“We have had to upwardly revise our expectation for the terminal rate in this cycle on several occasions.
“We readily admit the aggressiveness of this cycle has surprised us,” Mr Aird stated.
Mr Aird added that the major bank did not anticipate the data flow over the past month warranted another cash rate hike.
“We thought the case to at least pause for another month to gather additional data on the economy was strong, as it was deemed in April when the Board paused.”
ANZ head of Australian economics Adam Boyton said the upside risks that were behind ANZ’s decision to lift their terminal cash rate prediction are considered to be behind the June rate hike.
“Given our own views about the outlook for productivity, unit labour costs and the stickiness of services inflation we continue to expect another 25bp increase from the RBA, most likely in August.”
Why did the RBA hike?
The major banks tentatively predicted a hold in the cash rate at 3.85 per cent for June, however there was widespread expectation that the bank would have to raise rates in the coming months. For example, ANZ’s head of Australian economics, Adam Boyton, stated the bank expected a rate rise in either June or July – but that a move would most likely come in August.
ANZ updated its terminal cash rate to 4.35 per cent (up from 4.1 per cent) in the lead up to today’s decision, saying that August would be the month “most likely for a move”.
It comes after RBA board members last month agreed that “further increases in interest rates” could still be required, depending on how the economy and inflation evolve.
Furthermore, Mr Lowe voiced more concerns about inflation risks, particularly relating to wages.
The latest consumer price index (CPI) data, for the month of April, released by the Australian Bureau of Statistics (ABS) last week indicated that inflation rose to 6.8 per cent over the 12 months leading to April.
This data surprised several economists as they expected the RBA to hold the cash rate in June as a result of weak economic growth and various indicators showing signs of weakness.
According to the ABS’s latest business indicators data, wages and salaries rose 1.8 per cent during the March 2023 quarter, while the Fair Work Commission decided that award rates of pay will increase by 5.75 per cent as of 1 July 2023.
More to come.
[RELATED: Banks predict rate pause for June]