RBA: Very little for rates markets to react - Westpac
Damien McColough, Head of Rates Strategy at Westpac, suggests that from a rates market perspective, they were interest in the RBA’s commentary around short term funding.
Key Quotes
“They noted that the increase in short-term wholesale interest rates over recent months was “partly due to developments in the United States, but there are other factors at work as well. It remains to be seen the extent to which these factors persist.”
“That is the first time that the RBA has acknowledged that other more idiosyncratic factors are at work, not just a re-balancing of supply/demand conditions in the US. While they did so without providing further insight into what those other factors may be, the market will now be looking for greater guidance as to what the implications may be for policy going forward in coming weeks.”
“Apart from that there was very little for rates markets to react to, and that is reflected in price action, which basically did not move. Subsequently our market views are also unchanged. Should the elevated short term funding rates persist, the market will increasingly question what the RBA’s response will be.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
