CANBERRA, AAP – Economists will be hoping for a clearer interest rate outlook in coming days after weeks of speculation a hike may be sooner than Reserve Bank of Australia predictions.
The RBA holds its monthly board meeting on Tuesday, where it is widely expected to keep its key cash rate unchanged at a record low 0.1 per cent, and where it has stood since November last year.
The central bank has repeatedly said interest rates will not rise until inflation is sustainably within the two to three per cent target, an event it does not expect to occur until 2024 at the earliest.
However, there is growing speculation among economists this could be brought forward to 2023 or even earlier, given the strength of the economy, particularly in the labour market.
The RBA has flagged Tuesday’s meeting has a couple of decisions to make, which may further influence such talk.
It is due to make announcements on two policy tools that run alongside the cash rate – its three-year bond yield target and its bond buying program – that are aimed at keeping market interest rates and borrowing costs low.
RBA governor Philip Lowe will hold a rare media conference after the board meeting to explain its actions and ensure the right messaging gets out on the outlook.
Dr Lowe will also address the Economic Society of Australia on Thursday.
Before Tuesday’s meeting, the weekly ANZ-Roy Morgan consumer confidence index will be released.
The index – a pointer to future household spending – eased a modest 0.2 per cent last week.
But it did not fully capture the impact of the rapid rise in COVID-19 cases in Sydney and subsequent lockdowns around the country.
Retail spending figures for May released on Monday highlighted the negative impact of Melbourne’s most recent lockdown.
The Australian Bureau of Statistics will also issue its latest weekly payroll jobs report, which will cover the fortnight ending June 19.
In the two weeks to June 5, payroll jobs declined 0.9 per cent, again reflecting the impact of the Victorian restrictions.