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Australia: Rate unchanged at 0.1%, RBA completes bond purchase program

The Bank of Australia kept interest rates at an all-time low of 0.1% and completed $ 275 billion ($ 194.40 billion) in bond purchases as expected, but delighted market expectations for an early interest rate hike.

Concluding the meeting in February, the Bank of Australia (RBA) stressed that the suspension of the bond market does not “imply” a short-term increase in interest rates and the board will be patient.

“As the board has previously stated, it will not raise interest rates until real inflation is within the target of 2% -3%,” said central banker Philip Lowe.

“While inflation has recovered, it is still too early to conclude that it is sustainable within the target range.”

Most analysts expected the bonds to mature as such quantitative easing was no longer required, with unemployment falling to a 13-year low and structural inflation rising to a seven-year high of 2.6%.

The latter was a big shock, as the RBA estimated that structural inflation would not reach 2.5% by the end of next year.

As a result, Lowe said, structural inflation is now projected to rise to 3.25% in the coming quarters, before falling to 2.75% in 2023.

Unemployment is expected to fall below 4% later in 2022 and will reach 3.75% by the end of next year.

Source: Capital

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