Daily Flows & Insights – No Change of Tune from the RBA

Daily Flows

  • The standout Term Deposit rate yesterday was 5.18% for 6 months, offered by an ‘A’ rated bank.
  • Flows continue in the semi-government floater space, with liquidity present in the market.
  • In an effort to chase yield, market participants are opting to place funds in the unrated space, where rates above 5% are common.

No Change of Tune from the RBA

  • As expected, the RBA made no significant changes yesterday, reiterating its hawkish stance in the face of a historically tight labour market and inflation outside the target band.
  • Governor Bullock was quick to dispel market pricing of potential rate cuts, despite markets betting on a cut this year.
  • There is strong emphasis on upside inflation risks, with a clear intent to maintain restrictive policy until targets are achieved.
  • The RBA noted that while GDP growth has been weak, aggregate demand continues to keep inflation elevated.
  • With this in mind, most economists are forecasting a cut early next year
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Curve Team
Jack Pedersen