Daily Commentary BY THE CURVE TEAM –

RBA Stance Firm

17th of August, 2020

Governor Phillip Lowe once again made the stance of the RBA abundantly clear to the house of representatives on Friday.

The rhetoric and messaging from the RBA are becoming uncannily familiar. Negative rates, foreign exchange intervention and direct financing of government debt are firmly off the RBA’s agenda.

If the RBA are to increase its efforts to support the economy, they will look to expand its bond buying program and/or Term Funding Facility, as well as lowering the cash rate closer towards 0. Lowe made clear though that the current policies were thought to be adequate to assist the economy.

Lowe also once more nudged the government to maintain its fiscal stimulus efforts. He cited Australia’s low debt relative to the world, very low borrowing costs and the long-term benefit to the economy as reasons for fiscal stimulus.

The Minutes from August’s Policy decision will be released tomorrow. Given the consistent messaging from the RBA about their policy stance no surprises are expected in the minutes.

Otherwise it is a quiet week for data releases. The number of new Covid-19 cases will continue to be monitored closely, especially in NSW and Victoria.

Josh Stewart

Client Relationship Manager