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Central banks preview: RBA, RBNZ


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Some central banks are due to decide on rates this week, starting on Tuesday with the Reserve Bank of Australia (RBA).

 Angela Barnes | Financial presenter/producer, London | Publication date: Monday 02 October 2023 10:10

The market sees no change and expects the cash rate to remain at 4.1%. However, a recent uptick in inflation has economists thinking that another rate hike could happen before the end of the year. The Reserve Bank of New Zealand (RBNZ) will also have an update on Wednesday on its monetary policy path and is also expected to stay put at 5.5%. Inflation is still decelerating in the country, and the official position is that rate increases have yet to be transmitted to the broader New Zealand economy. IGTV’s Angela Barnes has this round-up.

The Reserve Bank of Australia

This week, there are a few important meetings happening in the central banking world. One of the first meetings is being held by the Reserve Bank of Australia (RBA). People are predicting that the RBA will keep interest rates the same at 4.1%. However, there is some talk that rates could go up later in the year if there is an increase in inflation. But, this inflation was mainly caused by higher oil prices, so the RBA might not think it's a big deal unless oil prices keep going up and make things more expensive in Australia.

The Reserve Bank of New Zealand

There's another bank meeting happening in New Zealand, by the Reserve Bank of New Zealand. It's expected that they will keep their rates at 5.5%. Inflation is going down in New Zealand, and the rate increases haven't had a big impact on the overall economy yet. The Australian dollar is trading lower against the USD right now, but it got a little boost from some good news about manufacturing in China. On the other hand, the US dollar is doing well because of decent economic data and good interest rates on US Treasury bonds. The future of the Australian dollar will be affected by how careful the US Federal Reserve is with their interest rate decisions.

The New Zealand dollar

The NZD is also a bit lower against the US dollar, but it did recently go up to a seven-week high. Traders are now waiting for data about manufacturing in the US and for the rate decisions from both the RBA and the Reserve Bank of New Zealand. All of this could make the market a bit more unpredictable, which means there might be some big changes in prices.

 

 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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