RBA reckoning
Investors hoping this week's market turmoil might increase the chances of a near-term rate cut were left sorely disappointed on Tuesday.
If investors had hoped yesterday’s stomach-churning market meltdown might have increased the chances of an imminent rate cut from the Reserve Bank of Australia, then governor Michele Bullock is ready to dispel that notion.
“Based on what I know today and what the board knows today, what we can say is that a near-term reduction in the cash rate doesn’t align with the board’s current thinking,” she told a media conference following the RBA’s decision to keep rates steady at 4.35%.
One day after Japan’s Nikkei recorded its worst session since the 1987 crash, falling by more than 12%, things were looking much more normal on Tuesday. The Nikkei had clawed back much of yesterday’s losses, up 10% at the time of writing, while the ASX 200 closed 0.5% higher.
The muted ASX reaction partially reflects the fact it didn’t fall as hard as other markets on Monday. But it can also be attributed to Bullock’s messaging, which made it clear the RBA is firmly focused on fighting inflation and not soothing investor nerves after yesterday’s major hiccup.
