Australia holds rate, to decide QE program in February

     Australia's central bank left its key interest rate unchanged, as expected, and said the economic recovery would not be derailed by the Omicron strain of COVID-19 and the future of its bond purchase program would be discussed at the next board meeting in February.
     The Reserve Bank of Australia (RBA) left its cash rate target at 0.10 percent, unchanged since November 2020 when it was lowered for the third time last year to support economic activity during the first wave of the pandemic.
     RBA will also continue its current pace of purchases of government securities at A$4 billion a week until at least the middle of February when its stock will total $350 billion of bonds issued by both the central government, states and territories.
     In his statement, RBA Governor Philip Lowe said the decision by the board would be guided by three factors: the actions of other central banks, how the Australian bond market is functioning and most importantly, the actual and expected progress towards the goals of full employment and inflation.

     The board is next scheduled to meet on Feb. 1, 2022.
     In addition to the three rate cuts last year, RBA also began buying bonds - known as quantitative easing (QE) - and targeting a yield on the benchmark government bonds to anchor short-term interest rates.
    But last month the RBA dropped its policy of targeting the yield due to the improvement in the economy and progress toward reaching the inflation target, and is now continuing along the path toward normalizing its monetary policy.
    "The Australian economy is recovering from the setback caused by the Delta outbreak," Lowe said, confirming his expectation that economic activity will return to the pre-Delta path in the first half of next year.
     "Household consumption is rebounding strongly and the outlook for business investment has improved," Lowe said, adding:
     "The emergence of the Omicron strain is a new source of uncertainty, but is not expected to derail the recovery."
     Lowe also said inflation has risen but remains low in underlying terms and confirmed the forecast for underlying inflation to reach 2.5 percent over 2023.
     Lowe also confirmed the RBA's guidance that it will not increase the cash rate until actual inflation is sustainably within the bank's 2.0 to 3.0 percent range, adding this "is likely to take some time and the Board is prepared to be patient."

Australia holds rate but drops bond yield target

      Australia's central bank left its key interest rate unchanged but dropped its policy of targeting the yield on a benchmark government bond and pulled forward the likely time for a rate hike to 2023 due to what it said was "the improvement in the economy and the earlier-than-expected progress towards the inflation target."
     The Reserve Bank of Australia (RBA) kept its cash target of 0.10 percent, unchanged since November 2020 when it was lowered for the third time last year during the first wave of the COVID-19 pandemic.

     And while RBA will no longer target a 0.10 percent yield on the benchmark April 2024 Australian government bond, it confirmed it will continue to buy government bonds at a rate of $4 billion a week until at least mid-February 2022.

     "The Australian economy is now growing again, after the recovery from the pandemic was interrupted by the Delta outbreak," RBA Governor Philip  Lowe said, adding the economy is expected to record a solid gain in the fourth quarter after contracting in the third quarter.

     By the middle of next year, the RBA expects economic output to return to its pre-Delta path.

     But RBA also reiterated its guidance that will not raise the cash rate until inflation is sustainably within its target range of 2 to 3 percent.

     "The board is prepared to be patient," Lowe said, seeking to dampen speculation in financial markets that RBA will soon follow the lead of 34 central banks in other countries that have raised rates this year in reaction to the recent rise in inflation.

      RBA expects underlying inflation to be no higher than 2.5 percent by the end of 2023, with wages growing 3 percent the same year. Previously it did not expect these conditions to be met before 2024.

      Lowe stressed the bank's board would look through spikes in inflation and only expects inflation to reach the target once the labour market is tight enough to generate wage growth that is "materially higher than it is currently."

      "While on the issue of timing, the latest data and forecasts do not arrange an increase in the cash rate in 2022," Lowe said.

     Lowe said Australia is in a different situation than many other countries, with the labour force participation not falling and nor are supply disruptions showing up in consumer prices.
     Although inflation has risen, the core or underlying rate, remains low and wages are only expected to pick up gradually as the labour market tightens.

      Australia's headline inflation rate eased to 3.0 percent in the third quarter from 3.8 percent while core inflation rose to 2.1 percent from 1.6 percent.

      The rise in core inflation illustrates the general rise in global inflation and triggered expectations in financial markets that RBA would start to tighten its policy. The yield on the April 2024 government bond last week surged to 0.8 percent, significantly over RBA's target of 0.1 percent.

      In addition to the three rate cuts last year, RBA also began targeting the yield on benchmark government bonds to anchor short-term interest rates and reinforce its guidance that its cash rate was unlikely to be raised until the bond matured.

     "Today, more than a year and a half on, the balance of probabilities is a little different," Lowe said, adding he wants to make clear that dropping the yield target doesn't mean the cash rate will be raised before 2024.

     Lowe said the yield target had been effective in supporting the economic recovery but its effectiveness as a monetary policy tool has declined as expectations about future interest rates shift due to the pace of the economic recovery and progress in reaching RBA's goals.

     "There is genuine uncertainty as to the timing of future adjustments in the cash rate," Lowe said, adding it is entirely possible it will remain at the current level until 2024.

     "But it is also possible that an earlier move will be appropriate," Lowe said, adding: "But it is now also plausible that a lift in the cash rate could be appropriate in 2023."

     RBA forecasts Australia's economy will grow 3 percent this year, 5.5 percent in 2022 and 2.5 percent in 2023.

      Underlying inflation is seen around 2.25 percent this year and 2022, and 2.5 percent in 2023, while wages should grow 2.5 percent in 2022 and 3 percent in 2023.

Australia holds rate, extends bond purchases 3 months

     Australia's central bank left its main interest rate steady but extended its current pace of purchases of government bonds by another three months, saying this "reflects the delay in the economic recovery and the increased uncertainty associated with the Delta outbreak."
     The Reserve Bank of Australia (RBA) left its target for the cash rate at 0.10 percent, unchanged since November 2020 when it was lowered for the third time last year during the COVID-19 pandemic.

     The bank also confirmed its guidance that it will not raise the rate until inflation is sustainably within its target range of 2 to 3 percent, a condition it doesn't expect to be met before 2024.
      In addition to cutting the rate last year to cushion economic activity, RBA also began targeting a yield on a benchmark government bond and buying government bonds to ensure longer-term interest rates remained low, reinforcing its easy monetary policy.
     But reflecting a faster-than-expected recovery of the economy in the first half of this year, RBA in July began rolling back some its crises measures.
     This included keeping the April 2024 government bond as its target bond for a 0.10 percent yield and trimming its weekly purchases of bonds to $4 billion from $5 billion in early September. 

     The pace of $4 billion of bond purchases would then continue until at least mid-November when the RBA board would review this pace.

     But the spread of the Delta variant of the coronavirus in June triggered widespread lockdowns.

    "The recovery in the Australian economy, has, however, been interrupted by the Delta outbreak and the associated restrictions on activity," RBA said, extending its purchases of bonds at a weekly rate of $4 billion until at least mid-February next year.

     RBA expects the latest wave of the virus to temporarily lead to a material decline in gross domestic product in the third quarter and boost unemployment.

     But as vaccinations continue to rise and restrictions then again ease, RBA expects the economy to bounce back though there is uncertainty over the timing and pace of this and the recovery is likely slower than at the start of this year.

     "The Delta outbreak is expected to delay, but not derail, the recovery," RBA said, expecting the economy to again expand in the fourth quarter and return to pre-Delta path in the second half of 2022.

     As in recent months, the RBA said it was committed to "maintaining highly supportive monetary conditions to achieve a return to full employment in Australia and inflation consistent with its target," adding it would continue to review its bond purchasing program.

     Australia's inflation rate jumped to 3.8 percent in the second quarter from 1.1 percent in the first quarter for the highest rate since the third quarter of 2008 while its GDP grew an annual 9.60 percent in the same quarter from 1.3 percent in the first quarter.

Australia holds rate but begins rolling back easy policy

     Australia's central bank left its key interest rate steady, as widely expected, but took two steps toward rolling back its extraordinary easy monetary policy as the economy and labour market continues to recover faster-than-expected from the COVID-19 pandemic.
     The Reserve Bank of Australia (RBA) left its benchmark cash rate target at 0.10 percent, unchanged since November 2020 when it was lowered for the third time that year to cushion economic activity from the impact of the COVID-19 pandemic.

     In addition to the rate cuts, RBA in March last year took a page out of the Bank of Japan's playbook and began targeting a yield of 0.10 percent on a 3-year benchmark government bond and in November embarked on quantitative easing by buying government bonds.

     RBA has been in a lengthy but continuous easing cycle since November 2011, cutting the rate 18 times and by 4.65 percentage since then.

     Helped by a combination of rising exports of commodities, fiscal and monetary stimulus, Australia's economy is now bouncing back from the pandemic, unemployment is falling and inflation rising.

     "The economic recovery in Australia is stronger than earlier expected and is forecast to continue," RBA said, raising its forecast for inflation in coming months.

     However, RBA also affirmed it was committed to maintaining "highly supportive monetary conditions" to ensure Australia returns to full employment and inflation meets its target.

     The bank's board once again said it would not raise its cash rate until actual inflation is sustainably within its 2.0 to 3.0 percent target range and it doesn't expect this to happen before 2024.

     But RBA also began rolling back some its crises measures, with the board deciding to keep the April 2024 bond as its target bond rather than extend the horizon to the November 2024 bond, which means the maturity of its yield target gradually declines.

     "The situation today is quite different from that in March last year; we are no longer looking over a cliff but instead transitioning from recovery to expansion," RBA Governor Philip Lowe said, adding the improved economy has widened the range of plausible scenarios for the cash rate.

     "This means that probabilities have shifted and the decision to adjust the approach to the yield target reflects this shift in probabilities," Lowe said, adding the yield target had proved to be a successful monetary policy measures and helped lower funding costs.

      The RBA's second A$100 billion tranche of bond purchases will be completed in early September  and while it plans to continue buying bonds after this date, the weekly purchases will be lowered to $4 billion from the current $5 billion. 

      In November the board will again review the rate of its purchases as it balances the benefit of responding in a timely way to the flow of economic news while providing financial markets with guidance about its future purchases.

     "We will continue buying bonds until there is further material progress towards the goals for full employment and inflation," Lowe said, with the RBA wanting to see clear evidence the stronger economy is translating into a pickup in aggregate wage growth and a lift in inflation towards the target.

      Australia's inflation rate rose to 1.1 percent in the first quarter from 0.9 percent in the fourth quarter and RBA raised its forecast for inflation to rise temporarily to about 3.5 percent to the June quarter from last month's forecast of over 3.0 percent.

     But underlying inflation is still seen averaging 1.5 percent this year and 2 percent by mid-2023.

Australia holds rate but boosts bond purchases $100B

     Australia's central bank left its monetary policy rate steady along with its target for government bond yields but boosted its purchases of bonds by another $100 billion to ensure the economy continues to recover as it still expects the path ahead to be "bumpy and uneven."
     The Reserve Bank of Australia (RBA), which last eased its monetary policy stance in November 2020 when it cut the benchmark cash rate for the sixth time and lowered its target for the yield on the 3-year Australian government bond, also said it would not raise its cash rate until inflation is sustainably within its 2.0-3.0 percent range, which would require materially higher growth in wages and employment.
     "The Board does not expect these conditions to be met until 2024 at the earliest," the RBA said, keeping its cash rate at 0.10 percent after cutting it by 65 basis points in 2020, including a 15 point cut in November when it also cut its target for the 3-year government bond to around 0.10 percent.
     The guidance by RBA about its future policy stance is essentially the same as in December last year when it said it did not expect to raise the cash rate for "at least 3 years." 
     However, in December the RBA also said it was keeping the size of its bond purchases under review and was "prepared to do more if necessary." 
     RBA did not repeat this phrase today, the first sign the monetary easing cycle may be coming to an end in light of an upbeat assessment of both the global and domestic economy.
     But RBA also said it was committed to "maintaining highly supportive monetary conditions" until it reaches its goal, adding this is "still some way off" given the current outlook for inflation and jobs.
     "In Australia, the economic recovery is well under way and has been stronger than was earlier expected," RBA said, using the word "stronger" rather than "better" as in December.
     "While the path ahead is likely to remain bumpy and uneven, there are better prospects for a sustained recovery than there were a few months ago," RBA said, adding the development of vaccines against COVID-19 has improved the outlook but the recovery remains dependent on the health situation and significant fiscal and monetary support.
     Australia's economic recovery - gross domestic product grew 3.3 percent in the third quarter of 2020 from the second quarter - is expected to continue and RBA's central forecast is for GDP to grow 3.5 percent in both 2021 and 2022.
     The central bank pulled forward its forecast for economic output to return to pre-COVID level by mid-2021 as compared with its December forecast of end-2021.

Australia cuts rate 6th time, to buy A$100 bin of bonds

     Australia's central bank launched a major package of stimulus measures, including its third rate cut this year, aimed at boosting economic activity, including employment and inflation, and help the country recover from the "significant damage" from the COVID-19 pandemic.

     The Reserve Bank of Australia (RBA) lowered its benchmark cash rate by another 15 basis points to 0.10 percent and has now cut it by 65 basis points this year following two cuts in March at the height of the global flurry of monetary stimulus to combat the damaging effects of the pandemic.

     Since June 2019, when RBA began its current monetary policy easing cycle, the cash rate has been cut six times and by a total of 140 basis points. 

      Although recent economic data has been better than expected, RBA Governor Philip Lowe said the pandemic has inflicted significant damage on the economy and it "will take tine to repair that damage and it is highly likely that the recovery will be uneven and drawn out," and unemployment will be higher than the country has become used to.

     "With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs," RBA said.

      In addition to lowering the cash rate, RBA cut its interest rate on new drawings under the Term Funding Facility, which was launched in March, by 15 basis points to 0.10 percent, and cut the interest rate on Exchange Settlement balances to zero.

      RBA also lowered its target for the yield on Australian government bonds to around 0.10 percent from 0.25 percent and will now purchase A$100 billion of government bonds in the secondary markets with maturities of 5 to 10 years over the next six months, splitting the purchase 80/20 of bonds issued by the central government and those by states and territories.

      In March RBA began buying 3-year government bonds to hold down the yield, a form of yield-curve control as used by the Bank of Japan in recent years, and said today it would buy "whatever quantity is required to achieve the 3-year yield target" in addition to the $100 billion bond purchase program.

     "At its core, today's decision reflects the Reserve Bank's commitment to do what we reasonably can, with the tools that we have, to support the recovery of the Australian economy," RBA Governor Philip Lowe said in an accompanying speech to explain the significance of the bank's measures.

     "The Board views addressing the high rate of unemployment as a national priority and it wants to do what it can to support job creation," Lowe added.

      Despite the recent improvement in economic data and the economic outlook, RBA said fiscal and monetary support will be required for some time to boost employment and inflation and said it would not raise the cash rate until inflation is sustainably within the 2-3 percent target range.

     "For this to occur, wages growth will have to be materially higher than it is currently," RBA said, adding: "Given the outlook, the Board is not expecting to increase the cash rate for a least three years."

     Lowe confirmed that before any increase in the cash rate, the target for 3-year bond yield would be removed while the size of RBA's bond purchase program will remain under review and it is "prepared to do more if necessary."

     Lowe stressed that RBA "is not out of firepower," but in terms of interest rates he said the bank has "gone as far as it makes sense to do in the current environment" and there was no change in the "board's view that there is little to be gained from lowering the policy rate into negative territory."

     While lowering the rate into negative could help "lead to a helpful depreciation of the Australian dollar," Lowe said it could also impair the supply of credit to the economy and lead some people to save more, rather than spend more," so the bank's board views a negative policy rate "as extraordinarily unlikely."

     RBA's full update of its economic forecast will first be published on Friday, but the bank said both household spending and employment data have been a little stronger than expected and growth in the year to June 2021 is now expected to be close to 6 percent as compared with an earlier forecast of 4 percent.

     The unemployment rate is also expected to peak a little below 8 percent rather than the 10 percent that was expected three months ago.

     In RBA's central scenario, job creation will be slow over coming months and the unemployment rate will still be around 6 percent by the end of 2022 and thus lead to lower growth in wages and inflation.

     In each of the next two years, annual wages are only expected to grow less than 2 percent and inflation is expected to be 1 percent in 2021 and 1.5 percent in 2022.

This week in monetary policy: Australia, Canada and the ECB

    This week - May 31 through June 6 - central banks from three countries or jurisdictions are scheduled to decide on monetary policy: Australia, Canada and the European Central Bank from the euro area.

    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.

    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

WEEK 23
MAY 31 - JUN 6, 2020:
AUSTRALIA	2-Jun	0.25%	0	-50	1.25%	DM
CANADA	3-Jun	0.25%	0	-150	1.75%	DM
EURO AREA	4-Jun	0.00%	0	0	0.00%	DM

    www.CentralBankNews.info

This week in monetary policy: Israel, Australia, Poland, South Korea and Serbia

    This week - April 5 through April 11 - central banks from 5 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Australia, Poland, South Korea and Serbia.
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.

    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

WEEK 15
APR 5 - APR 11, 2020:
ISRAEL	6-Apr	0.25%	0	0	0.25%	DM
AUSTRALIA	7-Apr	0.25%	-20	-50	1.50%	DM
POLAND	8-Apr	1.00%	-50	-50	1.50%	EM
SOUTH KOREA	9-Apr	0.75%	-50	-50	1.75%	EM
SERBIA	9-Apr	1.75%	-50	-50	3.00%	FM

    www.CentralBankNews.info

From Pacific to Atlantic 38 central banks slash rates

       From the South Pacific to the North Atlantic central banks are slashing interests rates to ease the devastating blow to economic activity from the spread of the coronavirus and injecting trillions of dollars of liquidity to ensure the financial system continues to operate smoothly.

      This week alone, 38 central banks - from the United States to Fiji and Iceland - have cut their rates, boosting the number of rate cuts so far in the month of March to 60.
      Since the outbreak of the coronavirus, or Covid-19, in China began to affect financial markets in late January, policy rates have been cut an astounding 79 times, with many central banks cutting rates multiple times in response to the growing threat of a global recession.
      Illustrating the speed with which the threat to economic growth has mushroomed, 40 of those rate cuts have been taken at multiple extraordinary policy meetings, such as the U.S. Federal Reserve, the Bank of Canada, the Bank of England and the Reserve Bank of Australia.
      On Friday March 20, for example, the central banks of Thailand, Namibia, Romania and Mexico cut rates at emergency policy meetings.
       From the beginning of this year, 55 different central banks have cut policy rates 85 times by a cumulative 6,453 basis points, or a net reduction of 6,013 points when taking into account the four rate hikes seen this year from Kazakhstan, the Czech Republic, the Kyrgyz Republic and Denmark.
      Including other measures taken to ease monetary policy in addition to rate cuts - such as lowering reserve requirements, cutting countercyclical capital buffers, injecting large-scale liquidity, launching new low-cost loan programs or restarting asset purchases - there have been at least 139 steps to ease monetary policy.
      The global monetary policy rate (GMPR), the average interest rate of 97 central banks worldwide, has plunged 63 basis points this year to 5.06 percent from 5.69 percent at the end of 2019, 6.42 percent at end-2018 and 5.99 percent at end-2017.
      The damaging effect on the global economy from the virus began to slowly emerge and then accelerate after Jan. 23, when China's government imposed the "Wuhan Lockdown" on the industrial hub and city of 11 million people to contain the spread.
      Illustrating just how interwoven the global economy has become, Sri Lanka's central bank was the first central bank to refer to the coronavirus when it lowered its rate on Jan. 29, days before China's central bank on Feb. 3 began to pump in liquidity to the banking system at lower interest rates.
     Thailand's central bank then followed suit by cutting its rate on Feb. 5 and since then the rate cuts have come in a fast and furious pace, spanning the globe from Mongolia to Mauritius.

      MARCH
     So far in March the following 46 central banks have cut rates 62 times: Australia (twice) Malaysia, USA (twice), Saudi Arabia (twice), Bahrain (twice), UAE (twice), Qatar (twice), Kuwait (twice), Jordan (twice), Hong Kong (twice), Macau (twice), Moldova, Canada (twice), Argentina, Mauritius, UK (twice), Iceland (twice), Serbia, Mongolia, Ukraine, Norway (twice), New Zealand, South Korea, Sri Lanka, Czech Republic, Egypt, Chile, Armenia, Turkey, Pakistan, Vietnam, Tunisia, Morocco, Poland, Trinidad & Tobago, Fiji, Ghana, Brazil, Taiwan, Philippines, Indonesia, South Africa, Thailand, Namibia, Romania and Mexico.
      Kazakhstan and Denmark stand out as the only central banks to have raised rates in March.
  
      FEBRUARY
      14 central banks cut rates in February: Iceland, Thailand, Brazil, Honduras, Philippines, Russia, Belarus, Mexico, Argentina (twice), Namibia, Turkey, China, Indonesia and The Gambia.
      Two central banks, the Czech National Bank and the National Bank of the Kyrgyz Republic, have raised rates.

      JANUARY
      11 central banks cut rates in January: Argentina (3 times), North Macedonia, Turkey, South Africa, Malaysia, Kenya, Lesotho, Sri Lanka, Ukraine, Costa Rica and Azerbaijan, with rates lowered by a cumulative 1,125 basis points while Tajikistan raised its rate.

For complete details on all changes to monetary policy worldwide, please click on Central Bank News'  section Easier or Tighter?, which is updated regularly.     www.CentralBankNews.info

Australia cuts rate 25 bps as virus to lower Q1 growth

    Australia's central bank lowered its benchmark cash rate by another 25 basis points to 0.50 percent, the first central bank among developed economies to lower its rate this year, saying this "was to support the economy as it responds to the global coronavirus outbreak."
     The Reserve Bank of Australia (RBA), which already lowered its rate three times in 2019 by a total of 75 basis points, most recently in October, said economic growth in the first quarter of this year is "likely to be noticeably weaker than earlier expected" and "the board is prepared to ease monetary policy further to support the Australian economy."
     The RBA, which already lowered its forecast for economic growth to 1.9 percent in the year to June from an earlier 2.6 percent prediction, said the coronavirus was having a "significant effect" on Australia's economy, particularly in the education and travel sectors, and this was likely to affect domestic spending.
    "As a result, GDP growth in the March quarter is likely to be noticeably weaker than earlier expected," RBA said,  adding it was difficult to predict how large and long-lasting the effect would be.
     However, once the virus is contained the economy is expected to return to an improving trend, supported by low interest rates, high spending on infrastructure, the low exchange rates, a positive outlook for the resources sector, a recovery in residential construction and household consumption while the government has also indicated it would assist those businesses most affected.
     In addition to becoming the first developed market central bank to cut its rate in response to the coronavirus, RBA was also the first central bank to specifically point to the dampening impact of the virus on growth in the first quarter as a reason for its easing.
     Thailand's central bank, which cut its rate on Feb. 5, linked its rate cut to much lower growth in 2020, while the other central bank that also cut rates following the outbreak more generally referred to the rise in uncertainty and risks to growth from the virus.
     19 other central banks have cut rates since Jan. 29 when Sri Lanka's central bank, as the first central bank, referred to the outbreak of the coronavirus as threat to global growth.
      At its previous policy meeting in early February, the RBA had also referred to the coronavirus, but only described this as "another source of uncertainty" that was having a significant impact on China but it was too early to determine how long-lasting this would be.

2020 Global Central Bank Monetary Policy Calendar

     Herewith the first draft of the 2020 calendar for meetings by central bank committees that decide monetary policy.
     The following table includes the date for scheduled monetary policy meetings for more than 45 of the world's central banks. In the event that policy meetings take place over several days, the date listed below is for the final day of the meetings when decisions are normally announced.
     Central Bank News will update this calendar several times in coming weeks as some central banks have yet to release their meeting schedule for 2020.
     During the year the calendar is also regularly updated as some monetary policy committees only announce the date for the upcoming meeting a few weeks in advance.
     Readers are therefore encouraged to check the latest version of the calendar here.
     You may replicate the calendar in part of full only if you link to Central Bank News.

DATE	FX CODE	COUNTRY	CENTRAL BANK
JANUARY
8-Jan	RON	Romania	National Bank of Romania
8-Jan	PLN	Poland	National Bank of Poland
9-Jan	ILS	Israel	Bank of Israel
16-Jan	TRY	Turkey	Central Bank of Republic of Turkey
16-Jan	ZAR	South Africa	South African Reserve Bank
17-Jan	KRW	South Korea	Bank of Korea
17-Jan	ZWD	Zimbabwe	Reserve Bank of Zimbabwe
21-Jan	JPY	Japan	Bank of Japan
22-Jan	CAD	Canada	Bank of Canada
22-Jan	MYR	Malaysia	Central Bank of Malaysia
23-Jan	NOK	Norway	Norges Bank
23-Jan	EUR	Euro area	European Central Bank
28-Jan	HUF	Hungary	Central Bank of Hungary
29-Jan	USD	United States	Federal Reserve
29-Jan	CLP	Chile	Central Bank of Chile
30-Jan	UAH	Ukraine	National Bank of Ukraine
31-Jan	BGN	Bulgaria	Bulgarian National Bank

Australia holds rate, still ready to ease again if needed

     Australia's central bank left its benchmark cash rate steady at a record low of 0.75 percent but reiterated it "is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time."
     The Reserve Bank of Australia (RBA), which has cut its rates three times by a total of 75 basis points since June, also confirmed its recent guidance that it is reasonable to expect an "extended period of low interest rates" will be required to reach full employment and the inflation target given global development and the space capacity in the economy.
     While the RBA also repeated its description from September of the outlook for the global economy as "reasonable" with risks tilted to the downside, today it added a number of central banks had eased monetary policy in response to the persistent downside risks and subdued inflation, and "expectations of further monetary easing have generally been scaled back over the past month and financial market sentiment has improved a little."
     RBA said the outlook for the Australian economy was little changed from three months ago and "after a soft patch in the second half of last year, a gentle turning point appears to have been reached."
     Australia's economy has been decelerating in the last four quarters and grew only 1.4 percent year-on-year in the second quarter form 1.7 percent in the first quarter.
     RBA's central scenario is for the economy to grow around 2.25 percent this year and then improve to around 3.0 percent in 2021.
     This compares with its August forecast for growth this year of around 2.4 percent and 2.75 percent in 2020. A new quarterly forecast will be released on Nov. 8.
     The Australian dollar has strengthened in the last few weeks and rose another 0.2 percent after the policy decision to 1.449 to the U.S. dollar. However, the Aussie remains 2 percent below its start of the year, having steadily depreciated since early 2018 as global economic growth began to slow.

Australia cuts rate another 25 bps, ready to ease again

     Australia's central bank lowered its benchmark cash rate by another 25 basis points to a new historic low of 0.75 percent and said it "is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement the inflation target over time."
     The Reserve Bank of Australia (RBA) said its decision to lower interest rates further was aimed at supporting employment and income growth and provide greater confidence that inflation will be consistent with its medium-term target as the economy still has spare capacity and lower interest rates will help make inroads into that.
     "The Board also took account of the forces leading to the trend to lower interest rates globally and the effect this trend is having on the Australian economy and inflation outcomes," RBA said.
     RBA has now cut its rate three times this year by a total of 75 basis points following cuts in June and July and confirmed it expects to keep interest rats low for an extended period of time to reach full employment and achieve its inflation target.
      Inflation in Australia has been stable but below RBA's 2.0 to 3.0 percent percent target for most of this year and fell to 1.6 percent in the second quarter of this year from a 2-1/2 year low of 1.3 percent in the first quarter.
      As inflation pressures remain subdued, RBA expects inflation to be a little under 2 percent over 2020 and a little over 2 percent over 2021.
    "While the outlook for the global economy remains reasonable, the risks are tilted to the downside," RBA said, pointing to the impact of the U.S-China trade dispute and other technology disputes, i.e. Japan and South Korea's dispute, on trade flows and investment, which is leading to scaled-back investments due to increased uncertainty.
    Although Australia's economy grew by a weaker-than-expected 1.4 percent in the second quarter, continuing the downwards trend in the last four quarters, RBA Governor Philip Lowe said a turning point appears to have been reached and lower interest rates, recent tax cuts, infrastructure spending, signs of a more stable housing market and a brighter outlook for the resources sector should support economic growth.
     The Australian dollar, known as the Aussie, has been depreciating since January 2018 and was trading at 1.48 to the U.S. dollar today, down 4 percent this year and down 13.5 percent since the start of 2018.

Australia keeps rate steady, confirms willing to cut again

     Australia's central bank left its benchmark cash rate unchanged at a record low of 1.0 percent and confirmed its guidance from last month that it is willing to cut rates further if needed to support economic growth and reach its inflation target.
     The Reserve Bank of Australia (RBA), which cut its rate in June and July by a total of 50 points before holding it steady in August, also reiterated that it expects to keep interest rates low "for an extended period" to help reduce unemployment and make progress in boosting inflation.
     As in August, RBA Governor Philip Lowe described the outlook for the global economy as "reasonable," but the risks remains tilted to the downside as trade and technology disputes are affecting international trade and investment as businesses scale back spending due to uncertainty.
     Australia's economy slowed sharply in the first half of this year with gross domestic product up by only 1.8 percent year-on-year in the first quarter, down from 2.3 percent in the previous quarter.
     But in its monetary policy statement from last year the RBA said growth was likely to have troughed in the middle of this year and forecast growth of 2.4 percent this year and 2.75 percent next year, supported by low interest rates, tax cuts, infrastructure spending, stabilization of the housing market and a brighter outlook for the resources sector.
     Sluggish growth has kept a lid on inflation, which is expected to remain subdued for some time, hitting a little under 2 percent in 2020 and a little above 2 percent in 2021.
     Headline inflation rose to 1.6 percent in the second quarter from 1.3 percent in the first quarter, but is still below RBA's target of 2.0 to 3.0 percent.
     Australia's dollar firmed slightly in response to the RBA's decision, which was largely as expected, to around 1.49 to the U.S. dollar, down 4.7 percent this year.

Australia holds rate but ready to cut further if needed

     Australia's central bank left its benchmark cash rate steady at 1.0 percent, as expected, and said it would "ease monetary policy further if needed to support economic growth and the achievement of the inflation target."
     The Reserve Bank of Australia (RBA), which cut its cash rate in June and July by a total of 50 basis points, also lowered its outlook for inflation to "be a little under 2 percent over 2020" as compared with its forecast from last month that inflation would be "around" 2 percent in 2020.
     For 2021 RBA still expects inflation to be a little above 2.0 percent. The RBA targets inflation of 2.0 to 3.0 percent and in July Australia's inflation rate rose to 1.6 percent from 1.3 percent.
     In today's statement, the RBA board is transparent and open about its willingness to lower rates further, a departure from last month when it said it was willing to "adjust monetary policy if needed."
      In addition to lowering its outlook for inflation, the RBA echoed Governor Philip Lowe's speech from last month in Sydney that was widely seen as a the first use of "forward guidance" by the RBA.
      "It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target," the RBA said today.
      In his speech on July 25, Lowe also said "it is reasonable to expect an extended period of low interest rates" whether or not further monetary easing is needed.
      Following the 2007-2009 Global Financial Crises when interest rates were slashed to essentially zero, central banks such as the Federal Reserve, the Bank of England and the European Central Bank began employing forward guidance as a regular part of their monetary tool box.
     By signaling the likely course of future monetary policy to financial markets and businesses, central banks increased the transparency and thus efficiency of their monetary policy.
     In its commentary on the global economy, the RBA reiterated that the outlook "remains reasonable," but the risks remain tilted to the downside due to uncertainty from trade and technology disputes that are affecting investments.
     RBA also acknowledged that economic growth in Australia has been lower than it had expected in the first half of this year but it expects growth to strengthen from here, with the central scenario for the country's economy to grow around 2.4 percent this year and 2.75 percent in 2020, supported by low interest rates, recent tax cuts, spending on infrastructure, a brighter outlook for the resources sector and signs of stabilization in the housing market.
    In the first quarter of this year Australia's gross domestic product grew by 1.8 percent year-on-year, down from 2.3 percent in the previous quarter.
    Australia's dollar firmed today in response to the RBA's statement and was trading around 1.47 to the U.S. dollar, up from 1.48 yesterday, but down 3.4 percent this year.

Australia cuts rate another 25 bps and ready to cut again

     Australia's central bank lowered its benchmark cash rate for the second month in a row amid sluggish economic growth and inflation and said it was ready to lower rates further.
     The Reserve Bank of Australia (RBA) cut its cash rate by 25 basis points to a new historic low of 1.0 percent and has now cut it by 50 percent this year following a cut in June as interest rates continue their steady but consistent decline since November 2011.
     "This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target," RBA said, adding lower interest rates will also help reduce the economy's spare capacity.
     Looking ahead, RBA's board said it would continue to monitor the labour market "and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time."
     In a speech in at a community dinner in the city of Darwin shortly after RBA's decision, Governor Philip Lowe added the two back-to-back rate cuts will put the economy on a better path toward winding back spare capacity and RBA was "prepared to adjust rates again if needed to get us closer to full employment and achieve the inflation target..."
     RBA's rate cut today was widely expected following Lowe's comments on June 20 that it would be unrealistic to expect the first rate cut on June 4 to materially shift the economy's current path and "it is not unrealistic to expect a further reduction in the cash rate."
     RBA repeated its view from last month that the outlook for the global economy remains "reasonable" but the risks are still tilted to the downside and the uncertainty generated by trade and technology disputes were affecting investment, boosting expectations of easier monetary policy by major central banks and lowering borrowing costs to historically low levels.
     As an example, Lowe in Darwin noted the Australian government can now borrow money for 10 years at around 1.3 percent, the lowest rate since 1901 when the former six British colonies became a federation.
     A softer economy and RBA's easing has also helped lower the exchange rate of the Australian dollar since January 2018, with the Aussie today trading at 1.43 to the U.S. dollar, down 0.7 percent since the start of this year and down 10.5 percent since the start of 2018.
     Australia's economy has slowed in the last 3 quarters, with annual growth in the first quarter of 1.8 percent, down from 2.3 percent in the previous quarter, and below RBA's forecast from May for growth this year of 2.75 percent.
     RBA said its outlook for economic growth "remains reasonable," but added consumption was subdued and weighed down by a long period of low income and declining house prices. But higher investment in infrastructure and the resource sector is helping offset some of this drag.
     Although employment growth has been strong and labor force participation at record levels, Lowe noted the jobless rate has risen in the last two months to 5.2 percent in May, and growth in wages remains low, making little inroads into the economy's spare capacity.
     Inflation is also subdued - it fell to 1.3 percent in the first quarter from 1.8 percent in the previous quarter - but RBA said it would be boosted in the second quarter by higher petrol prices and the central scenario remains for underlying inflation to be around 2.0 percent in 2020.

This week in monetary policy: Australia, Sweden, Poland, Albania and Romania

    This week - June 30 through July 6 - central banks from 5 countries or jurisdictions are scheduled to decide on monetary policy: Australia, Sweden, Poland, Albania and Romania.

    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.

    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

WEEK 27
JUN 30 - JUL 6, 2019:
AUSTRALIA	2-Jul	1.25%	-25	-25	1.50%	DM
SWEDEN	3-Jul	-0.25%	0	0	-0.50%	DM
POLAND	3-Jul	1.50%	0	0	1.50%	EM
ALBANIA	3-Jul	1.00%	0	0	1.00%
ROMANIA	4-Jul	2.50%	0	0	2.50%	FM

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