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