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December 9th - The Reserve Bank of Australia (RBA) failed to deliver an early Christmas "gift" to mortgage holders, keeping interest rates unchanged at its final meeting of the year. In Tuesdays widely anticipated, unanimous decision, the Monetary Policy Committee maintained the cash rate at 3.6%. Rising inflation in the second half of 2025 dashed market hopes for further rate cuts, after the RBA had already cut rates by a total of 75 basis points since February. The interest rate market and most economists now believe that the RBAs easing cycle has ended. Some analysts pointed out that if inflationary pressures continue to rise, the central bank may be forced to raise rates as early as February next year. Domains chief economist, Nicola Powell, said the shift in interest rate expectations could help alleviate the pressure of rapidly rising housing prices over the past year.Reserve Bank of Australia: Global economic uncertainty remains significant, but so far, it has had little impact on overall growth and trade with Australia’s major trading partners.The Reserve Bank of Australia (RBA) believes that some of the recent rise in core inflation is due to temporary factors.The Reserve Bank of Australia: The Committee is focused on achieving its mission of price stability and full employment and will take the measures it deems necessary to achieve this goal.The Reserve Bank of Australia (RBA) stated that the committee will closely monitor data and evolving assessments of the outlook and risks to guide its policy decisions.

The EUR/GBP exchange rate recovers above 0.8000 in advance of Eurozone inflation and UK gross domestic product

Alina Haynes

Mar 30, 2023 16:05

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The EUR/GBP pair extended its recovery above 0.88 during the Asian trading session. Anticipating that the European Central Bank (ECB) will continue to raise interest rates to combat persistent inflation, the cross has depreciated progressively. Friday will see the publication of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) and Gross Domestic Product (GDP) (Q4) figures. Prior to the publication of these figures, it is anticipated that the asset will exhibit explosive activity.

 

It is anticipated that the preliminary Eurozone HICP will decelerate significantly from 8.5% to 7.3%. While it is anticipated that the core HICP will rise to 5.7% from 5.6% in the previous release. Weak energy prices are anticipated to have a significant impact on Eurozone inflation. In light of Christine Lagarde's prediction that inflation will remain elevated for an extended period of time, the European Central Bank (ECB) is expected to continue tightening monetary policy.

 

In the interim, banking tensions are subsiding as the absence of information regarding additional collateral damage has a positive impact on the market. Chief Economist Philip Lane stated on Wednesday that ECB interest rates must rise if banking tension has no or a "relatively limited" impact.

 

Investors avidly anticipate the United Kingdom's Gross Domestic Product (GDP) data. According to the consensus, the United Kingdom's growth in the fourth quarter of CY2022 remained unchanged. It is anticipated that the annual GDP will remain unchanged at 0.4%. It is expected that the British economy will undergo a severe recession as a result of high inflation and sluggish growth.

 

The Bank of England (BoE) policymakers appear confident that inflation will moderate in the near future and that the unexpected rise in February's inflation was a one-time anomaly; however, the absence of evidence raises doubts. If inflation persists, BoE Governor Andrew Bailey stated that additional rate increases would be announced. In contrast, Bank of America (BoA) analysts anticipate that the Bank of England (BoE) will not increase rates and will maintain current levels until 2024.


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