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RBA maintains cash rate at 3.6%
The Reserve Bank of Australia kept its cash rate at 3.6% during its April meeting, the first pause in the central bank's series of interest rate hikes since May 2022
Asian Stocks Decline as US Factory Data Disappoints Amid Inflation Fears
RBA Maintains Cash Rate at 3.6%, Signals Readiness to Resume Hikes if Necessary
Germany Posts Largest Trade Surplus in Over a Year on Record High Exports
What’s happened in the markets?
Asian stocks mostly declined as investors weighed the impact of disappointing US factory data against concerns over inflation, leading to a mixed session on Wall Street and subsequent declines in US futures. However, European futures saw an uptick while Treasuries experienced a fall. Brent crude oil prices continued to climb as several banks increased their price forecasts.
The Reserve Bank of Australia kept its cash rate at 3.6% during its April meeting, as anticipated, marking the first pause in the central bank's series of interest rate hikes since May 2022. The decision was made to account for policy lags, with the board emphasizing its readiness to resume raising borrowing costs should the economy require it. Governor Philip Lowe stated that the decision allows the board more time to assess the economy's state and outlook amidst ongoing uncertainty, with growth expected to remain below trend in the next few years. The committee will closely monitor both local and global economic data before its next meeting just before the May budget. The RBA also maintained the Exchange Settlement interest rate at 3.5%.
Germany's trade surplus reached €16 billion in February 2023, which was only slightly unchanged from the previous month and lower than the expected €17 billion. However, it was the largest trade surplus since July 2021, thanks to a 10-month high in exports, which hit a record high.
What to watch?
US inflation is reportedly showing signs of easing, but according to Federal Reserve Governor Lisa Cook, price pressures could persist due to a tight labor market, the ongoing conflict in Ukraine, and China's reopening. While a "disinflationary process" is currently underway, Cook warns that the economy has not yet fully recovered. The latest JOLTS report, which is set to be released today, may indicate a decline in job openings for February, but it is expected that there will still be approximately 1.82 job openings for every unemployed worker, highlighting the continued tightness in the labor market.
In the meantime, the FDIC has announced that it will begin marketing a $60 billion portfolio of loans issued by Signature Bank in the coming months. The portfolio consists mainly of commercial real estate loans and commercial loans, along with a small pool of single-family residential loans.
