The Reserve Bank of Australia keeps interest rates on hold
The Reserve Bank of Australia keeps interest rates on hold, at the historically low level of 0.1 percent, it was expected to last until at least 2024.
MM Analysis
1. Monetary Policy
- Keeps interest rates on hold, at 0.1 percent
- The initial $100 billion government bond purchase program is almost complete and the second $100 billion program will commence next week.
2. Economic forecast
- The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven.
- The economic recovery in Australia is well under way and is stronger than had been expected.
- CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions but inflation is expected to remain below 2 per cent over the next few years.
3. Forward Guidance
- The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range, it does not expect these conditions to be met until 2024 at the earliest.
4. Conclusion
- The RBA statement meets the market expectation, although employment rate has returned to the pre Covid-19 level, when the salary subsidy policy expires, the employment market is still uncerntain. The Bank of Australia has once again stated that it will not raise interest rates before 2024. In conclusion, this statement maintains dovishness.
MM Analysis
1. Monetary Policy
- Keeps interest rates on hold, at 0.1 percent
- The initial $100 billion government bond purchase program is almost complete and the second $100 billion program will commence next week.
2. Economic forecast
- The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven.
- The economic recovery in Australia is well under way and is stronger than had been expected.
- CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions but inflation is expected to remain below 2 per cent over the next few years.
3. Forward Guidance
- The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range, it does not expect these conditions to be met until 2024 at the earliest.
4. Conclusion
- The RBA statement meets the market expectation, although employment rate has returned to the pre Covid-19 level, when the salary subsidy policy expires, the employment market is still uncerntain. The Bank of Australia has once again stated that it will not raise interest rates before 2024. In conclusion, this statement maintains dovishness.