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This is a discussion on Company News by ForexMart within the Forex Brokers forums, part of the Trading Forum category; RBA Kept the Rates at a Record Low Amid Positive Economic Outlook The Reserve bank of Australia maintained the rates ...

          
   
  1. #401
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    RBA Kept the Rates at a Record Low Amid Positive Economic Outlook



    The Reserve bank of Australia maintained the rates at a record low on Tuesday which gives a positive look on the domestic activity prior to the data, which demonstrates growth more than 3 percent in the previous quarter.

    RBA governor Philip Lowe sees the economy is to be “performing well” despite the assumption of reduction in unemployment. The decision of RBA is in line with the expectations as they keep the cash rate at 1.50 percent that was last reduced on August 2016 as policymakers wait for a recovery of the growth, as well as, its inflation.

    However, as the consumer prices remain rather calm which prompted the RBA to have a steady growth for the past two years and it seems that there is no rush for the policymakers to tighten the rates. The markets are not pricing the rates until 2020.

    Lowe anticipated the unemployment to lessen and chances for inflation to return to targets, although this will be in a sluggish manner.

    However, household consumption brings uncertainty on the outlook amid weaker income but debts remain high.

    A few economists assume that the sluggish wage growth of 2 percent and careful spending of consumers may affect negatively the economy.

    The GDP data to be released on Wednesday is anticipated to increase by 0.6 percent in the September quarter compared to the previous three months growth of 0.9 percent. Meanwhile, the annual growth is probably 3.3 percent compared to the former sluggish growth of 3.4 percent in the last quarter.

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    BoC Next Rate Hikes are Uncertain as Canadian Dollar Slumps to 18-month Low



    The Bank of Canada maintained the interest rates on Wednesday which is already expected and signals gradual future rate hikes. It pushes the Canadian dollar as low as 18-month low that would affect market expectations on another rate hike next month.

    The central bank has raised their rates five times since July 2017 amid the strengthening of the economy that requires monetary tightening in reaching the target 2.0 percent inflation.

    Yet, there are downward revisions on growth data from Statistics Canada along with the recent macroeconomic developments. This may mean there is another possibility of non-inflationary growth which can also mean that the economy has not reached the limit as initially thought.

    The possibility of a rate hike decreased from an estimated of 60 percent prior to the 36 percent based on the overnight index swaps market.

    A higher change in the next move will lengthen the period that also lessens the possibility for a January rate hike, according to the senior rates strategist at TD Securities, Andrew Kelvin.

    Overnight interest rate of the bank is at 1.75 percent that is lower than the “neutral” rate of 2.5-3.5 percent. Similarly, the monetary policy is not aggressive or accommodative.

    The bank remarked that the “Governing Council continues to judge that the policy interest rate will need to rise into a neutral range to achieve the inflation target”. Inflation forecast will be lower in the next month than the former forecast as gasoline prices decline.

    Yet, the Canadian economy is still in line with the anticipations for the third quarter but momentum will be lesser in the last quarter.

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    EU’s Investor Morale Plunged to a Four-year Low in December



    Eurozone’s investor morale plunged to a four-year low in December given the trade conflict. Italy’s budget along with the Brexit plan between the EU and Britain resulted in a decline in sentiment, according to the survey on Monday.

    Results from the Sextic research group shown a drop in investor sentiment index to -0.3 from 8.8 in November, which was the lowest level since December 2014 and the fourth straight monthly drop. The outcome has exceeded expectations to 8.1 decline.

    Meanwhile, the sub-index at present situation declined to 20.0 from 29.3 in November compared to the forecast of -18.8 from -9.8 the previous month.

    The Sentix managing director, Manfred Huebner, see that there is no optimism given the present global condition and recalling the 2008 financial crisis. The ECB is planning to end the billion-dollar government bond purchases as the economy declines at an average pace that puts pressure on politicians and central banks, he added.

    Another index on investor morale in Germany shows a decrease to 7.2 from 15.6 in December which can be deemed as ‘loss of momentum’ with concerns on US tariffs weaker Chinese car sales.

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