RBA Preview: Target rate to remain at its current level for the foreseeable future – Wells Fargo

Next Tuesday, the Reserve Bank of Australia will have it policy meeting. Market consensus see no change in rates. According to analysts at Wells Fargo, the central bank will keep its key rate unchanged for the foreseeable future. 

Key Quotes: 

“The Reserve Bank of Australia (RBA) held its Cash Rate and three-year yield targets at 0.25% at its last policy meeting in June. Since the May meeting, the central bank has sharply slowed the pace of its bond buying, as fixed income markets began to stabilize, only purchasing government bonds on one occasion. In the June announcement and subsequent minutes, policymakers were more upbeat on the Australian economic outlook, suggesting the depth of the downturn could be less than previously anticipated. In addition, members noted the number of new COVID-19 cases has decreased significantly and some restrictions on activity were being eased earlier than expected, while there have also been signs that hours worked stabilized in early May and some forms of consumer spending picked up.”

“At its meeting next week, we look for the RBA to maintain a steady policy and expect the current cash target rate of 0.25% to remain at its current level for the foreseeable future.”