RBA seen ‘on hold’ for the foreseeable future – UOB


Economist Lee Sue Ann at UOB Group reviewed the latest RBA event, where the central bank left the cash rate unchanged.

Key Quotes

“Following the May meeting, the Reserve Bank of Australia (RBA) decided to maintain its current policy settings, including the targets for the cash rate and the yield on 3- year Australian Government bonds of 25 basis points.”

“Going forward, we continue to expect a large fall in GDP in 2Q20 of -4.6% y/y, followed by smaller contractions of -2.8% y/y in 3Q20 and -0.9% y/y in 4Q20. We expect a further rise in the unemployment rate, for it to reach 10% by the end of this year, before only a partial recovery towards 8.0% in 2021. Hence, labour market indicators are likely to be important for policy going forward.”

“The 3-year Government yield in Australia is sitting comfortably near 0.25%. As such, we do not see further reductions in the cash rate, with negative rates ruled out by RBA Governor Phillip Lowe (for now). The focus will thus remain firmly on end-user rates via the yield curve target, as well as ensuring sufficient liquidity in bond markets and the free flow of credit to households and business. We also think that the fiscal policy arm will have to strengthen to provide support in the recovery phase.”

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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD bounces after upbeat COVID-19 cure news

EUR/USD is trading above 1.13, rebounding from the lows. Gilead reported that its drug Remdesevir substantially reduces mortality among COVID-19 patients. The news boosted stocks and weighed on the dollar. US coronavirus statistics are due out.

EUR/USD News

GBP/USD recaptures 1.26 as the market mood improves

GBP/USD is trading above 1.26 as the market mood improves and the safe-haven dollar retreats. Investors are shrugging off Brexit concerns and focusing on hopes to cure coronavirus. US COVID-19 statistics are due out.

GBP/USD News

XAU/USD consolidates daily gains above $1,800

After advancing to its highest level since September of 2011 at $1,818 on Wednesday, the XAU/USD pair staged a correction and briefly dropped below $1,800 on Thursday.

Gold News

Cryptocurrencies: War for dominance hit the bedrock of the market

Bitcoin tried to regain market share and activated sales in the Altcoin segment. BTC/USD, ETH/USD and XRP/USD are looking for supports and a rebound to push them to new elative highs. The current compression on the XRP/USD chart could trigger an exploding movement.

Read more

WTI drops to fresh weekly lows below $39 amid virus risks, IEA forecast

WTI (August futures on Nymex) extends the steep declines seen on Thursday to drops over 1.50% in the European session this Friday. The oil bears breach the 39 level to hit the lowest levels in eight days at 38.76.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures