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The Reserve Bank of Australia (RBA) has acted in line with expectations, keeping the Australian cash rate on hold at 4.35%.
The move falls in line with what ING Bank analysts were forecasting, along with many others.
In fact, in a recent survey of some two dozen economists, it was a lonely singular beancounter who predicted the RBA to hike – which they had called a “line ball call.”
In short, the RBA hasn’t really surprised anybody, here.
ANZ – which reported results today, revealing profits are down -7% vs pcp – cited stress in the economy in its Tuesday report, and noted the impact high interest rates are having on consumers.
This could also be tracked in the ABS’s retail data released earlier on Tuesday which showed that while retail sales volumes remain in decline (last Christmas’s growth was an outlier,) retail prices nonetheless have climbed 0.6% QoQ in the first three months of 2024.
And yet, we continue to see an equity rally YTD.
As stock markets have shown they can go on growing just fine in a high-interest-rate environment, panic around interest rate decisions has been less and less – no doubt also due to investor fatigue on hearing about them.
But with retail stocks the only real immediately obvious loser (and with bank NIMs already at depressing levels for a while now,) it’s not clear if even a hike would have truly destroyed market sentiment down under.
