More than a year after the discounts in the first period by the European Central Bank (ECB) and the United States, Australia recently joined the global average cycle by reducing borrowing costs in the country by a quarter of a point in late February.
The Pacific Country is one of the last advanced economies in the world that mutates its position on the interest rate. The only exception remains Japan, and it is actually raising the costs of capital after decades of negative prices and inflation.
The quarter reduction will reach the goal of the money price in Australia to 4.10 % and the interest rate paid on the stock market settlement balances to 4 %, which is a tab less than the Federal Reserve rate by 4.25 %.
In a statement of the Political Resolution, the Australian Governor of the Australian Reserve Bank (RBA) attributed the discounts to decline in inflation, which amounted to 3.2 % in the latest report. It also mentioned the continuation of “special demand growth”, as it was another major driver to reduce prices.
The recent GDP report over a quarter of a quarter reached 0.3 %, which is much lower than public expectations, an increase of 0.5 %. Economic growth numbers are also frustrated annual, indicating an increase of 0.8 % compared to 1.1 %.
Although the teacher was transmitted by RBA, the market explained the news as “sincerity”, as Polok was fast in reducing expectations for deeper intestinal discounts in the next few meetings.
“The market expects a few additional discounts in interest rates in the middle of next year, about three others, in addition,” Bullock said at the press conference that followed the RBA statement. “If this event will depend a lot on or not. Our feeling at the present time is that this is very confident.”
As a result, the market adapted its expectations for price discounts in the country, prompting the Australian dollar to the top against the US dollar, an unusual follow -up to reduce prices. “The interest rate markets are now pricing the markets in less than other price discounts from RBA this year, with the lack of price of the second round until August,” said David Scott, an analyst at Forex.com.
