RBA monetary policy decision due on Tuesday 7 July 2020 - preview
0430 GMT will bring the Reserve Bank of Australia monetary policy decision and statement from Governor Lowe
Unanimous expectations are that the cash rate and the bond yield target for 3-year Commonwealth Bonds will both be unchanged at 0.25%
ANZ comments on what to expect (in brief)
- We don't expect any change in policy
- Board continuing to say that it "is committed to do what it can to support jobs, incomes and businesses" and that "this accommodative approach will be maintained as long as it is required."
- It will be interesting to see if the statement says anything about recent pandemic developments in Melbourne. There is no doubt that a resurgence is the biggest downside risk to the economic outlook. A return to widespread lockdown would have a material impact on GDP and employment. The blow to sentiment in such circumstances may be longer lasting than that from the first lockdown.
ASB in brief:
- we expect the RBA to leave the cash rate and the bond yield target for 3-year Commonwealth Bonds at 0.25%
- On Tuesday 30th June, Deputy Governor Guy Debelle spoke on the RBA's policy actions. Of note, he referred to the Exchange Settlement balances (i.e. banks' deposit holdings at the RBA) and influence on the level of the cash rate, and how this has been passed on to other market rates. The efficacy of the RBA's policy actions is likely to be reiterated in the July statement.