The interest rate will remain unchanged, and interest rates will be cut two times in the future. The Australian dollar will hit key points or trigger QE.
Beijing time at 12:30 on September 3, 2019, the RBA will announce the 2018 annual interest rate resolution September, the market expects the RBA to maintain interest rates at the same level. The RBA last August 6th interest rate resolution maintained interest rates at 1%, ending two consecutive months of interest rate cuts, because the RBA still needs to observe the effect of two successive rate cuts to prevent a sharp cut in interest rates. But for monetary policy, RBA, chairman of the RBA, still has reservations. The RBA stressed that if necessary, it would further promote easing policy and interest rates would remain low for a long time.Forex trading platform
The RBA's latest stance suggests that high debt levels may complicate future monetary policy decisions and are ready to consider further measures. Recently released data show that Australia's construction permit data in July dropped sharply, and private sector credit growth slowed last month.
The RBA says that given the high level of debt on household balance sheets, the impact of changes in asset value and leverage on economic development may be more important than in the past. The RBA continues to closely monitor the development of residential mortgage loans and the risk of excessive household debt."Ready to consider further measures" to deal with any risks in the financial system.
The chairman of the RBA, Lowe and vice chairman both hinted that the lower limit of cash interest rates is around 0.25%-0.5%, if interest rates reach 0, or consider quantitative easing.
If commodity depreciation increases, there will be two interest rate cuts during the year.
Although it is widely expected that the RBA will maintain its cash interest rate at 1% in September 3rd, the possibility of unexpected rate cuts can not be ignored.Although the market confidence has rebounded after the back-to-back interest rate cuts in June and July, the economic risks facing the country are still high, so there is a possibility of further interest rate cuts in September and October.
Economists predict that the uncertainty of the international trade situation will make the economic outlook dim. If the RBA chooses to spend more time to weigh the impact of previous easing policies, the RBA may postpone to November and choose to reduce interest rates in December, and it will expect a total reduction of two to 0.5% in March.
In view of the sluggish domestic growth and weak inflation, it is unlikely that Luwei will stop there. Especially Australia's key commodity iron ore prices are sliding to the longest consecutive month of decline. The central bank may reach the lower interest rate limit in just six months and is forced to face unconventional policies.
Financial APP warned that the Australian central bank or approaching the lower interest rate limit, the cash rate will fall to 0.5% at the end of the first quarter of next year, which will have a direct impact on the Australian dollar.
RBA restart QE risk surge
If the Bank of Australia is expected to cut interest rates two times again, Nomura holding estimates that the bank's subsequent turn to unconventional policy is likely to be 40%.
Financial APP reminds us that from the historical data, the 0.65-0.5 interval is the key supporting position of the Australian dollar. When the global recession and the Australian economy are facing downside risks, the Australian dollar often falls or falls below this range, and is often accompanied by a series of stimulus measures of the RBA.
The RBA said that the RBA might take a regular loan facility, that is, to provide banks with funds below the market interest rate. If these funds are transferred, they may be linked to the cash rate - more attractive than other measures discussed, and similar easing measures such as bond purchases.
According to a recent market survey, 27 of the 31 economists interviewed said that the RBA will maintain its interest rate unchanged in September. But most economists surveyed believe that by the beginning of 2020, the RBA's interest rate will fall to 0.5%.
Economists from Barclay, Deutsche Bank and JP Morgan think that the RBA will cut interest rates in September. Economists from the three investment banks believe that the closer the market is towards the end of the year, the more divided the market will be.
At present, seven banks predict that if the RBA does not cut interest rates in September, it will cut interest rates in October. If the RBA fails to act in September, this figure will soon increase to 11. At the same time, 18 economists believe that the RBA will cut interest rates in November, especially in September and October, so it is expected that the market will reach a consensus on this issue.
Scotia Bank of Canada
Of the 31 forecasters surveyed, as many as 26 expect the RBA to maintain interest rates unchanged. OIS market data show that the RBA's interest rate cut is only about 1/7.
The core issue of the interest rate market is whether the RBA will cut interest rates again in 2019 or two interest rates again. The current situation is that the market expects to cut interest rates in full by the end of the year - a combination of possibilities that may reduce interest rates in October. Judging from the current situation, the market thinks that there will be another interest rate cut after December. However, this view is hardly convincing.
Bank of Commonwealth of Australia
This week, the RBA will stabilize the official cash rate to 1%, and is still ready to cut interest rates again if necessary. The bank expects the RBA to cut interest rates in November 2019 and February 2020. It pointed out that this week the Australian dollar opened lower than the US dollar. It is expected that the rest of the week will remain under pressure, which is mainly affected by the global economic prospects and trade winds. Although the Bank of Commonwealth of Australia does not think that the RBA will announce its interest rate cut in September 3rd, it is expected that the minutes will be cautious about the global economic outlook.
Commonwealth Bank of Australia
This week the Australian dollar opened lower against the US dollar and is expected to remain under pressure this week. It is mainly affected by the global economic outlook and trade winds. However, it is not thought that the RBA will announce its interest rate cut on Tuesday, but it is expected that the subsequent minutes will be cautious about the global economic outlook.
AMP Capital Investors
However, some analysts believe that on Wednesday, before the very weak economic data released on Wednesday, the RBA may cut interest rates to 0.75%. Chief economist Oliver (Shane Oliver) said the RBA should "cut interest rates" in September 3rd, but "it looks likely to keep interest rates unchanged."
He wrote in his weekend report that although the housing prices in Sydney and Melbourne may rebound, Australia's economic growth in the second quarter is still in the doldrums. The growth prospects of the construction industry are still bleak, and the threat of international trade tensions is increasing. Moreover, when unemployment is more likely to rise rather than fall, there is no sign of an increase in wages in Australia. This shows that Australia's economic outlook is still weak.
Finance and economics APP reminded that although the possibility of this rate cut is relatively low, it does not exclude the possibility that the RBA will follow the New Zealand Federal Reserve's surprise "big pigeon". The market needs to focus on closely monitored data from the RBA, including iron ore prices, the "red line" of the Australian dollar and Australian household debt levels (private sector credit growth data). In short, after the September meeting, if there is a strong signal that the RBA will take interest rate cuts in October, this may become a catalyst for the Australian dollar to fall back to 0.66, or even to renew the 10 year low.