The Australian dollar slide late now even as share markets moved to cut back hope of an August rate cut by central bank. Official inflation statistics for the second quarter proved core inflation rose 0.6 % in the quarter as well as 2 % per annum - within the 2 to 3 % target band that the RBA (Reserve Bank of Australia) uses to direct its policy decisions. Paul Bloxham, HSBC chief economist said that, usually, a low inflation consequence like this would be sufficient to see the Reserve Bank of Australia cut rates. However the difference this time is that the Reserve Bank of Australia has previously cut rates by 75 basis points in the last 3 months.
In their view, this has placed them a bit ahead of the game. The Australian dollar was at 1.0235 US Dollar from 1.0301 US Dollar late yesterday.
Against the Japanese currency yen, the local currency was from Y80.6975 to Y79.96. The official currency rate is currently 3.5 %, after the Reserve Bank of Australia cut interest rates by25bp basis points in June and 50bp in May.
Suddenly index swap markets are costing in just a 30% chance of an August let-up next to the inflation statistics. Head of Australian economics at the RBC Capital Markets, Su-Lin Ong said that, the August 7 interest rate choice remains a "close call", considering that policy-makers will be manipulated more by developments in Europe with the global economy rather than by local statistics. RBC Capital Markets still has an August month rate cut penciled in.
| < Prev | Next > |
|---|
