Market ‘misreading’ RBA on rates: Harper
RBA’s Ian Harper says the central bank won’t follow the US on hikes, and the market is reading too much local relevance into Fed moves.
RBA’s Ian Harper says the central bank won’t follow the US on hikes, and the market is reading too much local relevance into Fed moves.
The Australian Treasury Secretary said aiming for full employment implies a slow, or ‘tapered’, withdrawal of monetary and fiscal stimulus.
Traders now expect the RBA will raise its official cash rate five times before year-end, up from four just weeks ago.
The central bank may lift interest rates four times in quick succession late in 2022, according to economist and former RBA board member John Edwards.
The Reserve Bank’s cautious narrative is frustrating bond traders who think the central bank is failing to see the risks posed by foreign inflation.
RBA governor Philip Lowe may use opportunities next week to rebuild the central bank’s guidance, pointing to the prospect that interest rates may rise before the end of the year.
The Reserve Bank’s first policy meeting for 2022 will also see its program of government bond buying wound up entirely.
The harsh reality for the huge number of Australians living with mortgages is that the coming rise in interest rates could be far more rapid and brutal than most anticipate.
Even a small whiff of rising inflation will see the RBA capitulate on its now odd-sounding view that rates may not ratchet up until 2024.
The stage is set for a mighty clash of wills between ultra-hawkish money-market traders and a far more careful central bank.
Original URL: https://www.theaustralian.com.au/author/james-glynn/page/10