FX News: RBA Hints Cuts after RBNZ Decision | FinanceBrokerage
FX NEWS – The Reserve Bank of Australia hinted at more cuts to key rates as economy slows down. This comes after the Reserve Bank of New Zealand held rates steady last Wednesday.
RBA Governor Philip Lowe spoke to the Armidale Business chamber overnight. He said that while the economy reached a “gentle turning point,” he expected interest rates to remain low.
At the present, the bank’s official cash rate is at 1.0%, a historic low. Most of the market believes the bank will cut that rate again when board members hold their meeting next week.
In his speech, Lowe also touched on the matter of Australian farmers. He said that the weak agricultural sector weighed heavily on the household incomes of rural people.
The speech comes along with the decision of the RBNZ to hold monetary policy steady. It kept interest rates at 1%, also a historic low for the country.
Forex News on Monetary Policies
The forex markets have see huge cuts this year as central banks perform a “race to the bottom.” This is a phenomenon where major central banks cut interest rates to prop up the slowing economy.
The RBA has already slashed rate to historic lows, with 1% OCR similar to New Zealand and Albania.
The United Kingdom has lower. Its official cash rate is 0.75%. Israel has an interest rate of 0.25%. Denmark, Japan, Sweden, and Switzerland ahh have interest rates below 0.00.
The Reserve Bank of Australia will meet on October 2 to set policy. After the meeting, any changes to the interest rate or monetary policy will come to light. Markets are expecting a probably rate cut at this meeting.
Lowe said that the board was ready to cut rates if the economy needs it. He also mentioned achieving full employment and inflation target as the bank’s goals.
