NZ dollar barely budges ahead of RBA policy review by Paul McBeth

Lloyd Doyle
August 10, 2018

How positive can the data - that only ever describes the past - actually become to be able to cover up the [larger] risks the United Kingdom economy is facing?'AUD Benefits from Central Bank Speculation and Risk-Sentiment Investors have found risky commodity-correlated currencies like the Australian Dollar more appealing since the end of last week, due to rising commodity prices and stronger market performance in China.

ANZ said it expects to see peak-to-trough declines of about 10 per cent in both Sydney and Melbourne in the same period, while Dr Oliver believes Sydney and Melbourne will see declines of 15 per cent while the national average will fall by 5 per cent.

In the wake of today's mixed RBA meeting, Mr Lowe is likely to offer a cautious economic outlook, which would drag the Australian Dollar further down.

The Australian dollar jumped after the Reserve Bank of Australia (RBA) released its monetary policy decision.

See live rates for the NZ-US $ below.

The economy grew a surprisingly brisk 3.1 percent in the year to March and recent robust data on retail sales and trade suggest it maintained momentum through the June quarter.

"The steady rate setting has a lot to do with stubbornly low inflation, record high household debt, a slack labour market and, more recently, falling dwelling values", CoreLogic head of research Tim Lawless said.

The Governor said in his statement that the bank's central forecast for the Australian economy remained unchanged with GDP growth is expected to average a bit above 3% in 2018 and 2019. Lowe amended his language on China's economy in the statement, shifting from continuing to grow solidly to saying growth "has slowed a little". "That was an improvement on the previous call of 5.25%, but still a glacial decline from the current 5.4%". Therein contained the usual blue-sky analysis of the Australian economy, while touching on the various local and worldwide risks - primarily in the shape of concerns around private debt levels and trade-war fears. "Our more cautious forecasts suggest that rates may not rise until late in 2019, if not sometime in 2020". This is largely due to reduced demand by investors as the dynamics of the housing market have changed. However lending standards are expected to tighten further, which could make it harder for some to secure a home loan. "There is competition for borrowers of high credit quality".

It means Australia has one of the youngest populations among advanced economies, with a higher fertility rate and better prospects for growth.

While Lowe said "one-off declines in some administered prices in the September quarter are expected to result in headline inflation in 2018 being a little lower than earlier expected", the RBA still expects inflation to be higher in 2019 and 2020 than it is now.

Experts believe the cash rate will remain on hold until at least January 2020.

Dr Lowe said the RBA needed "to keep a close eye on the housing market and housing finance" but added it was helpful the change was taking place at a time when the unemployment rate is trending lower and the economy is recording good growth.

Other reports by Iphone Fresh

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