In a widely expected announcement on Tuesday, the Reserve Bank of Australia announced its intention to keep its cash rate stable at 1.5 percent. This announcement was not at all surprising given that it’s only been a month since the last easing measures were implemented. The RBA mentioned growth, low inflation and mixed labor market data as factors that contributed to its decision. Asian shares traded mixed following the announcement with the Australian dollar trading up to 0.57 percent against the U.S. dollar at 0.7620.
BOJ Easing Expected
In contrast to Australia’s relative stoicism, the Bank of Japan is expected to ease monetary policy further later this month, even though the country’s longer-end bond yields are hovering near six-month highs. Japan’s benchmark 10-year government bond yield hit a high of negative 0.003 percent on Monday, just below positive territory that hasn’t been seen since March, before retreating to 0.016 by the end of the trading day. The country’s 30-year bond yield was up to 0.52 in Monday’s Asian session. It is unclear whether this positive shift in the rates would last, though analysts did make mention of these shifts as a buying opportunity.
Trump Calls for Rate Hike
Over the holiday weekend in the United States, Republican presidential candidate Donald Trump called for a swift rate hike, claiming that the Federal Reserve is “ keeping the rates down so that everything else doesn’t go down.” Trump added that “We have a very false economy” and that “at some point rates are going to have to change.” U.S. interest rates were raised in December 2015 for the first time in nearly a decade, and Fed Chair Janet Yellen has hinted that another rate hike is coming soon, a forewarning that detractors could argue reduces the ingenuity in Trump’s word.