Steen Jakobsen
The Bank of Japan has abandoned quantitative easing and the European Central Bank may taper its bond-buying programme, so what is the role of central banks in 2017, asks Saxo Bank’s chief economist Steen Jakobsen.
Editor’s Picks 21 July 2016 at 1:00 GMT

Sinking inflation raises bets on August RBA cut

Traders are betting Australia’s central bank will cut interest rates as early as next month as inflation sinks below its target. The futures market is pricing in a 58 percent chance the Reserve Bank of Australia will cut its cash rate 25 basis points at its August 2 meeting after a two-month pause. The odds are up from 48% a week ago. Consumer-price gains slowed to an annual 1.1% in the first quarter, according to the median forecast of economists surveyed by Bloomberg before the report July 27. Core inflation dipped below the RBA’s 2-3% target range for the first time this century in three months ended March 31. Policy makers, who meet a week after the CPI data is published, in May noted global disinflation trends compounding Australia’s historically low wage increases. The AUD rally, which saw a seven-week winning streak up until July 15, also adds to the case for a rate cut. The appreciating exchange rate could complicate the economy’s transition away from mining investment.
Read full article at Bloomberg


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