RBA’s Lowe Sending AUD Tumbling Lower, After Rate Cut Comments
The RBA is thinking about cutting interest rates again to 0.10%, sending the AUD diving lower
Skerdian Meta•Thursday, October 15, 2020•2 min read
The Australian Dollar has been one of the most bullish currencies out there since March. China, which is the main market for Australian exports, has left the coronavirus behind, while the virus in Australia is being kept under control, with the number of infections remaining pretty low, compared to the rest of the world.
But Australia has been strengthening restrictions, and the Reserve Bank of Australia (RBA) is thinking about easing the monetary policy again, as RBA chairman Lowe said yesterday. Below are his comments:
- we are committed to do what we reasonably can, with the tools we have, to support the recovery
- the board will not be increasing the cash rate until actual inflation is sustainably within the target range
- it is not enough if inflation is merely forecast to be in the target range
- it is reasonable to expect that further monetary easing would gain more traction than was the case earlier
- we do not expect to be increasing the cash rate for at least three years
- we have been considering what more we can do to support jobs, incomes and businesses in Australia, in order to help build that important road to the recovery
- the board has not yet made any decisions
- to the extent that an easing of monetary policy helps people get jobs, it will help private sector balance sheets and lessen the number of problem loans
- recovery of the Australian economy is now underway, and we can look forward to this continuing
Once again Lowe is urging further fiscal support and he is not ruling out that his bank could provide further monetary support. He is signalling that he will be doing more, for example:
- “Our balance sheet has increased considerably since March, but larger increases have occurred in other countries. We are considering the implications of this, as we work through our own options.”
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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