On a Tuesday morning in Sydney, Australian markets leaned toward optimism after overnight gains on Wall Street, yet the day's real weight rested with the Reserve Bank, which was poised to lift interest rates for the first time in more than two years. Such moments mark a turn in the long conversation between a nation's households and its central bank, where cooling jobs and stubborn prices are weighed against the cost of borrowing. The decision, arriving with fresh forecasts, would show how the bank reads the economy's rhythm, and the governor's words an hour later would reveal where that rhyth
ASX Set to Rise as Wall Street Rallies Ahead of RBA Rate Decision Expected to Be First Hike in Over Two Years
The first hike in more than two years
On a Tuesday morning in Sydney, Australian markets leaned toward optimism after overnight gains on Wall Street, yet the day's real weight rested with the Reserve Bank, which was poised to lift interest rates for the first time in more than two years. Such moments mark a turn in the long conversation between a nation's households and its central bank, where cooling jobs and stubborn prices are weighed against the cost of borrowing. The decision, arriving with fresh forecasts, would show how the bank reads the economy's rhythm, and the governor's words an hour later would reveal where that rhythm may lead.
Early on Tuesday in Sydney, futures pointed to a firmer start for Australian shares after Wall Street closed higher overnight, with the Dow up 1.2 per cent and the S&P 500 and Nasdaq also gaining. But attention was already turning to the Reserve Bank, whose board would announce its rate decision at 2:30pm AEDT. Most expected a rise, which would be the first in more than two years.
The decision would arrive alongside the bank's quarterly economic forecasts, so markets would receive the rate call and the revised outlook together. The path to this moment had been shaped by a few clear signals since the board last met in December: unemployment had eased, and two sets of inflation figures showed prices still climbing faster than the bank wanted. A recent interview with the deputy governor had added to the sense that a change was coming.
Governor Michele Bullock was due to speak an hour after the announcement, and many expected her words to carry as much weight as the decision. Elsewhere, the mood was uneven. The Australian dollar slipped, oil and gold fell sharply, and iron ore eased. By afternoon, the day would show whether the first hike in years had arrived and how far the bank might go.
At 7:00am Sydney time on Tuesday, ASX futures stood at 8,818, up 86 points or 1 per cent, pointing to a stronger open for Australian shares. The signal came from Wall Street, where all three major indexes finished higher overnight. The Dow Jones advanced 1.2 per cent, the S&P 500 gained 0.6 per cent and the Nasdaq Composite rose 0.7 per cent.
The bigger event of the day was not the share market but the Reserve Bank of Australia. Its monetary policy board is due to release its interest rate decision at 2:30pm AEDT, and the expectation is that it will raise rates. That would be the first increase in more than two years.
The decision arrives together with the central bank's updated economic forecasts, published in its quarterly Statement on Monetary Policy. Both land at the same moment, so markets will get the rate call and the RBA's revised outlook side by side.
A fair amount has happened since the board last met in December, even with the holiday season in between. The unemployment rate has eased. Two separate sets of inflation figures have shown prices continuing to rise by more than the RBA is comfortable with. The central bank's deputy governor has also given an interview. Together, these are the developments shaping the expectation of a hike.
Governor Michele Bullock is scheduled to speak at 3:30pm AEDT, an hour after the decision. Whatever the board decides, the ABC's markets blog flags her remarks as must-watch, and what she says about the path ahead is likely to matter as much as the decision itself.
Elsewhere in the markets, the moves were mixed and in places sharp. The Australian dollar slipped 0.2 per cent to 69.42 US cents. Brent crude oil fell 4.2 per cent to US$66.33 a barrel. Spot gold dropped 3.9 per cent to US$4,673. Iron ore, a key Australian export, lost 1 per cent to US$102.80 a tonne.
So the day has two checkpoints: the 2:30pm rate decision with its fresh forecasts, and Bullock's 3:30pm remarks. Together they will show whether the first hike in over two years has arrived and how far the RBA signals it may go.
Bemerkenswerte Zitate
Inflation figures showed prices continuing to rise more than the RBA is comfortable with.— ABC markets live blog (paraphrase)
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Economy & Finance