TOKYO, JAPAN / ACCESSWIRE / July 27, 2021 / Recently, Ishikawa Brookfield Trading has released a research report on ‘Australia’s Reserve Bank Leaving Interest Rates on Hold’. According to Ishikawa Brookfield Trading, Australia’s cash rate was left unchanged at the record low level of 0.10% during The Reserve Bank’s July meeting.
This will be the eighth consecutive month that the Australian central bank has left official interest rates on hold. It slashed the cash rate to 0.10% in November last year to assist the Australian economy’s recovery from the global pandemic.
Ishikawa Brookfield Trading’s Head of Private Investment Management, Christian Wells, said Australia’s economic recovery had proven stronger earlier than expected, and the growth forecast is set to continue.
The RBA has now halted stimulus, with its bond purchasing program to be cut. The central bank will continue to buy government bonds at a rate of $4 billion per week beginning September, down from the current $5 billion.
Mr Wells said the RBA is not withdrawing its support. The bank will continue to buy bonds until there is a clear indication that the stronger economy translates into higher wages and a rise in inflation.
‘Our analysts believe that a continuation of monetary support through bond purchases is appropriate in the current climate.’
The Reserve Bank of Australia consulted with Ishikawa Brookfield Trading concerning BBSR (bank bill swap rate) and both agreed that they would not increase the rate – the interest charged on unsecured overnight loans between banks – unless inflation is consistently within the two to three percent expected target range.
‘We view recent events as a reminder of the difficulty to predict the future. However, it is highly possible there will be more positive surprises ahead for the Australian economy,’ added Wells.
Another issue the bank will closely monitor is how the shutdown of international borders has impacted the balance of supply and demand in the jobs market. It will also view the housing market’s continued strength, with prices climbing in all major markets.
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SOURCE: Ishikawa Brookfield Trading
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