RBA Kent: We are inflation targeters, unlikely to need negative rates in Australia


In an address to Finance & Treasury Association, Christopher Kent, Assistant Governor (Financial Markets), and in a speech titled, The Usual Transmission – Monetary Policy and Financial Conditions, he said that the RBA are inflation targeters and are not targetting unemployment while suggesting that negative rates is unlikely. 

Additional comments:

  • Recent broad-based easing in financial conditions will support demand.
  • More spare capacity than anticipated. 
  • Lower rates have worked to pull down AUD, despite firm commodity prices. 
  • Bank funding costs have declined to record lows.
  • Banks passed on most of rate cuts to depositors and borrowers.
  • Variable mortgage rates have fallen by 44 bps on average, consistent with past.
  • Approvals for new home loans rose broadly in June amid improving housing market.
  • We are inflation targeters. 
  • Unlikely to need negative rates in Australia.
  • Not all policies overseas are appropriate for Australia. 
  • Need for unconventional policies unlikely, but possible.
  • Negative rates at more extreme end of unconventional policy.
  • Lower AUD provides stimulus to economy.

FX implications:

Interesting that he has emphasised a focus on inflation because not too long ago, the unemployment rate was the trade. The fact that he has said that it is unlikely to need negative rates in Australia, but is possible, tilts the balance in the Aussie's bulls favour. AUD/USD is higher on the headlines, but not by much - +0.05%

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD: Ends five-day losing streak, but bias remains bearish

EUR/USD gained 0.19% on Wednesday, snapping a five-day losing streak, however, the outlook remains bearish as the pair is trading well below the former support-turned-resistance of 1.1162 (Aug. 12 low).

EUR/USD News

GBP/USD: Teasing inverse head-and-shoulders breakout

GBP/USD is flirting with the inverse head-and-shoulders neckline resistance of 1.2165 at press time. An inverse head-and-shoulders is a bullish reversal pattern and its success rate is high when it appears after a notable sell-off.

GBP/USD News

USD/JPY: 106.50 tested amid higher S&P futures, Treasury yields

Following a temporary reversal seen on Tuesday, the USD/JPY pair resume the bullish momentum in Wednesday's Asian trading and tests the 106.50 level, tracking the gains in the US Treasury yields and S&P 500 futures. 

USD/JPY News

Gold: Bulls cheer pullback from 10-day EMA

Following its successful bounce off 10-day exponential moving average (EMA), Gold takes the bids to $1507 during the early Asian session on Wednesday. The yellow metal now heads to Friday’s high around $1528 ahead of questioning the monthly top surrounding $1535.

Gold News

FOMC Minutes July 30-31 Meeting Preview: The Fed vs the markets

The Fed policy that switched to neutral in Jan completed the circle last month with first decrease in the base rate in more than a decade from a 2.50% upper target to 2.25%. Markets expect a second cut at the September 18th FOMC.

Read more

MAJORS

Cryptocurrencies

Signatures


  •  
  •  
  •  
  •  
  •