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PBoC boosts stimulus
RBA holds steady and China introduces new stimulus measures to boost growth
Goolsbee emphasized the need for proactive measures to avoid labor market disruptions
The Reserve Bank of Australia held its cash rate steady at 4.35%
China's central bank announced new stimulus, cutting reserve requirements and mortgage rates to support the economy
Fed’s Goolsbee hints at multiple rate cuts ahead
Chicago Fed President Austan Goolsbee suggested that the Federal Reserve is likely to implement several rate cuts over the next year, as the central bank's focus shifts from inflation to employment. Goolsbee stressed the need for a proactive approach to avoid potential disruptions in the labor market, warning against waiting for issues to arise.
While the timing of the initial rate cut is less critical, Goolsbee emphasized the importance of a long-term perspective, noting that rates need to come down significantly to ensure economic stability.
RBA holds rates at 4.35%
The Reserve Bank of Australia (RBA) held its cash rate steady at 4.35%, a move anticipated by markets. The central bank stated that recent data has reinforced the need to remain vigilant about inflation risks, maintaining a flexible stance without ruling out any options. The RBA reiterated its commitment to returning inflation to its target range and affirmed that it would act as necessary to achieve that goal.
The RBA noted that while headline inflation is set to temporarily decline due to cost-of-living relief measures, inflation is not expected to sustainably reach the 2-3% target until 2026, signaling ongoing medium-term inflation concerns.
China introduces new economic support measures
The People's Bank of China (PBoC) unveiled a series of measures aimed at bolstering the economy amid concerns that the official growth target of around 5% could be difficult to achieve following recent weak data. In a press briefing, Governor Pan Gongsheng announced that the central bank would reduce the reserve requirement ratio (RRR) by 50 basis points, injecting approximately CNY 1 trillion into the financial system. Additional cuts of 25 to 50 basis points may follow later this year.
The PBoC also plans to lower the seven-day reverse repo rate from 1.7% to 1.5% to reduce short-term borrowing costs for banks. This move will be accompanied by a 30-basis-point reduction in borrowing costs through the medium-term lending facility. Additionally, mortgage rates are expected to decrease by an average of 50 basis points, while the minimum down payment requirement for second homes will be lowered from 25% to 15%.
