Reserve Bank of Australia
RBA statement marks change in outlook but still dampens hike expectations
The Reserve Bank of Australia met market expectations in its first statement on monetary policy of 2022, confirming the imminent end of bond purchases and taking a markedly more positive tone on the economic outlook. But analysts interpret the lack of a move to a more aggressive rate hiking cycle as a more dovish tone than the reserve bank could have taken, pushing back higher rate expectations to the second half of the year.
Australian rates sell off could be premature if RBA sticks to its guns
Australian strategists and traders believe the Reserve Bank of Australia is unlikely to change its monetary-policy plans in response to a more aggressive US Federal Reserve, despite rising yields over the last month. The divergent central-bank paths could lead to more volatile markets, however.
RBA submits on YCC but keeps rate-hike expectations beyond analyst consensus
GPT Funds Management’s first green bond engaged new investors, with its 10-year tenor and use-of-proceeds format attracting a A$350 million orderbook from 35 accounts. With A$6.4 billion of eligible green assets, the firm says it has scope for future issuance.
Knock-on effects
The Australian Prudential Regulation Authority’s decision to reduce the size of the committed liquidity facility to zero by the end of next year may not be entirely surprising but it has ramifications across the local fixed-income market. The most obvious are on the demand side, but a closer examination of the decision’s implications also reveals likely consequences for supply dynamics.
Australian housing takes off… again
Australian house prices have once again defied expectations, this time from the early stages of the COVID-19 pandemic, by resuming a seemingly unstoppable upward trajectory. While the Reserve Bank of Australia continues to insist rate hikes are not coming in the medium term, speculation is mounting about macroprudential intervention and financial-stability risk.
RBA bond purchases to support economy into expansion phase
The Reserve Bank of Australia has revealed the next phase of its QE programme, which includes a slight tapering of volume and additional flexibility. The central bank continues to believe extraordinary monetary support is needed given weak inflation outcomes even as the Australian economy expands.
