[Armidale (Australia) 24th Reuters]-Lowe of the Reserve Bank of Australia (Central Bank) confirmed in a talk on the 24th that an additional rate cut might be necessary. The Australian central bank will hold a board meeting next week. The central bank cut policy rates for two consecutive meetings in June and July.
“It is likely that additional monetary easing will be necessary,” said Rowe, referring to continuous rate cuts, and said “next week's board will assess signs again.”
He said he was prepared to further relax the policy if necessary, and indicated that low interest rates would need to continue for a long time.
While considering quantitative easing depending on the situation, he indicated that the possibility was still low.
Following the remarks of the president, the view that the policy interest rate will be lowered from 1% to 0.75% at the Central Bank Council meeting on October 1st, the Australian dollar <AUD = D3> will be high on this day The price was 0.68065 USD.
Next week's 25 basis point (bp) rate cut probability, which interest rate futures market <0 # YIB:> incorporates, was 60%, down from 74% before the lecture.
“The market was seeking clearer evidence that the central bank would consider rate cuts in October, but that was not possible,” said TD Securities Asia-Pacific interest rate strategist Prashant Newnach. “Other statements by the governor are also positive about the economy, and that point is not confirming the rate cut next month,” he said.
Lowe hoped that the economy will recover moderately due to the effects of low interest rates, government tax refunds, a weak Australian dollar, improved outlook for the resource sector, and infrastructure investment.
We expect economic growth to moderately accelerate over the next few quarters. However, momentum and sustainability were recognized as unknowns at this stage.
Factors that hindered economic growth included overseas uncertainties such as the US-China trade war, as well as severe domestic drought and sluggish personal consumption.
The Australian economy has not been in recession for 28 years, but it was the lowest growth in April-June for the first time in 10 years.
The president pointed out that interest rate cuts at major central banks around the world, such as the Federal Reserve Board (FRB), also have a certain influence on the decision of the central bank.
“The structural changes in global interest rates cannot be ignored. If you try to ignore them, the Australian dollar will rise, and in the current situation, it will not help achieve inflation targets and full employment.”
He also pointed out that the current economic slowdown cannot be fully explained even in light of the effects of the global economic slowdown, domestic drought and sluggish household consumption. In particular, it was incomprehensible considering that the growth rate of employment exceeded the economic growth rate.
“Production growth is usually higher than employment growth. We are trying to understand what is happening. It may be just data noise, but it cannot be excluded as a more structural factor. "