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RBA reveals July cash rate call

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1 minute read

RBA reveals July cash rate call

by Cameron Micallef 07 July 2020 1 minute read

The Reserve Bank of Australia has announced its decision on the official cash rate for July amid speculation the central bank has reached the lower bound.

RBA
July 07, 2020

The central bank acted as most economists predicted, holding the cash rate at 0.25 per cent, having previously stated it does not believe negative rates are effective.

Sarah Hunter of BIS Oxford Economics highlighted before the announcement that the RBA has no interest in moving the cash rate.

“The RBA have made it clear that, for now at least, they don’t see negative rates as being necessary or effective. So, I think the next move will be up, but it will be quite some time into the future,” she said.

CreditorWatch CEO Patrick Coghlan told investors to watch out for changes in September. 

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“While positive sentiment has increased in recent weeks as the economy and trade starts to open up, the big concern is what happens in and around September when the stimulus (consumer and commercial) packages potentially come to an end – namely, JobKeeper, JobSeeker, rental abatement, a home loan repayment reprieve (mortgage holidays), insolvency/bankruptcy legislation and safe harbour changes,” he said.

“There’ll be a serious shock to the economy as people are once again forced to start paying the bills and/or stop receiving government incentives.”

When will the central bank raise the cash rate?

IMF Investors’ chief economist, Alex Joiner, believes savers will suffer through low rates for the foreseeable future. 

“The RBA is going to have its current policy settings in place for an extended period of time as it needs to support the economy while the labour market repairs.”

“It is difficult to envisage a rise in the cash rate before the end of 2022, in my view, as not only do unconventional policies need to be unwound first, it is abundantly clear the RBA won't want to be ahead of other central banks in removing their huge stimulus programs and therefore putting undue upward pressure on the Australian dollar.”

RBA reveals July cash rate call
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About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your... Read more

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