Sep RBA preview
The RBA meets on 7 Sep. The data was strong in Q2, but the outlook is dimmer due to Delta. Bond market capacity makes faster QE unlikely. The most likely outcome is to pre-commit to buy at 4bn per week until at least Feb’22.
macro, politics, markets, ambivalence
The RBA meets on 7 Sep. The data was strong in Q2, but the outlook is dimmer due to Delta. Bond market capacity makes faster QE unlikely. The most likely outcome is to pre-commit to buy at 4bn per week until at least Feb’22.
The RBA can push back the constraints on their Bond Purchase Program by buying beyond May’32 and buying more Semis. Doing both would create scope to ease policy by accelerating QE, if that was required.
There are three main problems with RBA QE: The RBA owns too large a share of the lines it does buy. The tenor of the bonds they buy is shortening. And Semis want to issue longer than the RBA buys to fund infrastructure.
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The annual revisions to GDP, and a weak 0.3%qoq in Q3 , mean that the GDP boom of H1’18 has
The RBA has set things up to resume the easing cycle that began in 2011 (I never believed in the whole ‘neutral’
There was some confusion about core CPI yesterday, thanks to the divergence between trimmed mean CPI & weighted median CPI
The reporting of recent AUD strength is getting a little unbalanced. See here for an example. This tone really gets