Australia’s central bank is poised to deliver its third interest-rate cut this year as inflationary pressures ebb, while Governor Michele Bullock is expected to stick with her cautious stance on the monetary policy outlook, Bloomberg News reported. Traders and most economists polled by Bloomberg anticipate the Reserve Bank will lower its cash rate by 25 basis points to 3.6% on Tuesday, bringing its cumulative easing in the current cycle to 75 basis points. The RBA will also publish its quarterly update of macroeconomic forecasts alongside the 2:30 p.m. decision.
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Australian household spending rose modestly in June as a rush for cars and electronics was offset by a slump in services, showing lower borrowing costs and higher real incomes are only slowly flowing into the broader economy, Reuters reported. Tuesday's data from the Australian Bureau of Statistics showed its monthly household spending indicator (MHSI) rose 0.5% in June, just half of the gain seen in May. Analysts had looked for an increase of around 0.8%.
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Australia's central bank judged lowering interest rates for a third time within four meetings was not consistent with its strategy of easing in a cautious and gradual manner, a reason that it shocked markets by holding steady this month, Reuters reported. Minutes of its July 7-8 policy meeting showed the majority of the Reserve Bank of Australia's nine-member board judged rates at 3.85% were still modestly restrictive, but it was difficult to know how far they could be cut before becoming neutral.
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Australian employment rose only marginally in June as the jobless rate jumped to the highest since late 2021, showing perhaps the first crack in what had been an unusually resilient labour market and adding to the case for a rate cut next month.
Investors sent the Australian dollar down 0.7% to $0.6480, the lowest in over three weeks. Three-year government bond yields slid 10 basis points to 3.386% as markets ramped up bets for an August rate cut to 85% from 76% previously.
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Liquidators are probing how money for a $15 million Queensland government project was transferred from the contract-winning cybersecurity company to its founder's bank account within 24 hours of the funds arriving, ABC.net.au reported. The funds transfer to Cryptoloc Holdings founder Jamie Wilson, who once wooed the state's top politicians and pop stars, is under investigation as a potential "fraudulent" transaction, according to a liquidator's report. The move is the latest shock from a disastrous cybersecurity tender won just before last year's state election by Cryptoloc Holdings.
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Australia's central bank said on Thursday it was taking another major step toward a wholesale central bank digital currency (CBDC) with a range of industry partners pursuing projects using real money and assets for the first time, Reuters reported. The Reserve Bank of Australia said its "Project Acacia" initiative would test 19 pilot cases involving money and assets, along with five proof-of-concept use cases involving simulated transactions. The trials involve a range of asset classes, including fixed income, private markets, trade receivables and carbon credits.
Australia is “urgently seeking” more detail on President Donald Trump’s threat to impose 200% tariffs on pharmaceutical imports to the U.S., Treasurer Jim Chalmers said, Bloomberg reported. “These are obviously very concerning developments,” Chalmers told Australian Broadcasting Corp. radio in an interview on Wednesday. “Our pharmaceutical industry is much more exposed to the US market. And that’s why we’re seeking – urgently seeking – some more detail on what’s been announced.” The U.S.