Borrow
RBA inclined to continue slashing rates
Australia should expect an extended period of low interest rates as the Reserve Bank of Australia tries to deliver on its inflation targets, according to the Reserve Bank governor.
RBA inclined to continue slashing rates
Australia should expect an extended period of low interest rates as the Reserve Bank of Australia tries to deliver on its inflation targets, according to the Reserve Bank governor.
In a speech made at the Anika Foundation Luncheon, governor Philip Lowe refused to rule out further rate reductions if the economy does not reach inflation targets, stating that “shifting the goalpost [on inflation] hardly seems like a good way to build long-term credibility”.
He added that “shifting the goalposts could also entrench a low inflation mindset”, with the bank still aiming for a 2 to 3 per cent increase to inflation.
How others got back on track
The governor cited Canada, Norway, Sweden and the United Kingdom as examples of other central banks focusing on inflation.
Despite mixed results, it appears that countries nearer to full employment capacity are more likely to have inflation close to target, Dr Lowe noted.
Lessons learned from Japan and the euro zone
The governor also considered the fact that Japan and parts of Europe have previously suffered an extended period of very low inflation as evidence for the need to focus on inflation targets, because for these economies, it became harder to get back on track due to a deflationary mindset taking hold.
Markets react
Off the back of the governor’s speech, the Australian dollar fell when compared to the US dollar, despite the United States’ Federal Reserve threatening to cut its own rates next week.
With rates continuing to drop worldwide, Payden & Rygel’s senior vice president, Brad Boyd CFA, has observed that each nation is trying to appear as competitive as it can.
“You have a little bit of a race to the bottom right now, in terms of wanting to look the cheapest compared to the rest of the world,” Mr Boyd said.
RELATED ARTICLES
About the author
About the author
Banking
Why central banks are ditching Treasuries for gold and what it means for business leaders
Gold’s renaissance is no longer just an investor narrative; it’s a reserve‑management strategy. Multiple reports indicate central bank gold holdings now exceed US Treasuries by value for the first ...Read more
Banking
AMP Bank GO strengthens fraud protection with innovative security measures
AMP Bank GO has emerged as a formidable player in the fight against financial fraud, with its innovative security measures setting new standards in the digital banking sector. Since its launch in ...Read more
Banking
APRA’s hybrid exit is a A$43bn catalyst: who captures the flow—bank credit or private credit?
Australia’s phase-out of bank hybrids isn’t just a regulatory clean-up—it’s a forced portfolio reallocation the size of a mid-tier super fund. Read more
Banking
AMP Bank GO adds business overdraft to mobile platform for small businesses
AMP Bank has launched a business overdraft feature within its mobile-first banking platform AMP Bank GO as cash flow concerns continue to affect small business owners across Australia. Read more
Banking
Bendigo Bank named most trusted bank in Australia for 10th consecutive quarter
Bendigo Bank has retained its position as Australia's most trusted bank, according to the latest trust rankings released by research firm Roy Morgan. Read more
Banking
Account-to-account and instant payments set to reshape global payments landscape
A new report from Capgemini predicts that instant payments will account for 22% of all non-cash transactions globally by 2028, signaling a major shift in the payments industry. Read more
Banking
Powell's Jackson Hole speech to shape market expectations on rate cuts
All eyes are on Federal Reserve Chair Jerome Powell's upcoming speech at the Jackson Hole symposium, as investors anxiously await clues about the central bank's future rate decisions. Read more
Banking
Bendigo Bank economist forecasts stable rates for 2024, cuts in 2025
Bendigo Bank's Chief Economist David Robertson is maintaining his prediction that the Reserve Bank of Australia (RBA) will keep interest rates unchanged throughout 2024, with cuts likely to begin in ...Read more
Banking
Why central banks are ditching Treasuries for gold and what it means for business leaders
Gold’s renaissance is no longer just an investor narrative; it’s a reserve‑management strategy. Multiple reports indicate central bank gold holdings now exceed US Treasuries by value for the first ...Read more
Banking
AMP Bank GO strengthens fraud protection with innovative security measures
AMP Bank GO has emerged as a formidable player in the fight against financial fraud, with its innovative security measures setting new standards in the digital banking sector. Since its launch in ...Read more
Banking
APRA’s hybrid exit is a A$43bn catalyst: who captures the flow—bank credit or private credit?
Australia’s phase-out of bank hybrids isn’t just a regulatory clean-up—it’s a forced portfolio reallocation the size of a mid-tier super fund. Read more
Banking
AMP Bank GO adds business overdraft to mobile platform for small businesses
AMP Bank has launched a business overdraft feature within its mobile-first banking platform AMP Bank GO as cash flow concerns continue to affect small business owners across Australia. Read more
Banking
Bendigo Bank named most trusted bank in Australia for 10th consecutive quarter
Bendigo Bank has retained its position as Australia's most trusted bank, according to the latest trust rankings released by research firm Roy Morgan. Read more
Banking
Account-to-account and instant payments set to reshape global payments landscape
A new report from Capgemini predicts that instant payments will account for 22% of all non-cash transactions globally by 2028, signaling a major shift in the payments industry. Read more
Banking
Powell's Jackson Hole speech to shape market expectations on rate cuts
All eyes are on Federal Reserve Chair Jerome Powell's upcoming speech at the Jackson Hole symposium, as investors anxiously await clues about the central bank's future rate decisions. Read more
Banking
Bendigo Bank economist forecasts stable rates for 2024, cuts in 2025
Bendigo Bank's Chief Economist David Robertson is maintaining his prediction that the Reserve Bank of Australia (RBA) will keep interest rates unchanged throughout 2024, with cuts likely to begin in ...Read more
