- Reserve Bank of Australia Kept Interest Rate Stable
- Eyes on Oil at OPEC + Meeting
- China’s Major Policy Shift
Reserve Bank of Australia Kept Interest Rate Stable
The Reserve Bank of Australia (RBA) maintained its policy framework by keeping the interest stable at 0.10%, but aims to increase the scope of the monetary expansion program by increasing the interest rate target due to the increasing coronavirus cases.
The RBA kept its policy rate and three-year interest rate targeting at 0.10% on Tuesday, but in July it had to reassess its interest rate target and monetary expansion policy, as Melbourne, the second largest city in the country, goes into a one-week quarantine makes the outlook obscure.
“The economic recovery in Australia is stronger than earlier expected and is forecast to continue,” Governor Philip Lowe said. “Progress in reducing unemployment has been faster than expected, with the unemployment rate declining to 5.5% in April. Job vacancies are at a high level and a further decline in the unemployment rate to around 5% is expected by the end of this year. There are reports of labor shortages in some parts of the economy.”
“Despite the strong recovery in the economy and jobs, inflation and wage pressures are subdued. While a pick-up in inflation and wages growth is expected, it is likely to be only gradual and modest.”
The RBA may be ready to increase asset purchases to support the economy in case the epidemic worsens in Melbourne, but many central banks around the world are preparing to abandon their emergency monetary policy.
“An important ongoing source of uncertainty is the possibility of significant outbreaks of the virus, although this should diminish as more of the population is vaccinated,’” Lowe stated.
Lowe predicted that Australia’s unemployment rate should fall to 4%, while in April unemployment was 5.5%.
Eyes on Oil at OPEC + Meeting
Brent oil rises to $70 a barrel with a forward assessment report as oil markets focus on the OPEC + meeting to be held today.
Futures contracts rose 1.4% in the London market. According to the OPEC + assessment report, most of the stocks that had increased during the epidemic period melted, and the rest of the stocks will fall sharply in the second half of the year.
OPEC + is expected to announce an increase in production starting in July, following the meeting today, on Tuesday.|
“There’s some confidence right now improving demand should be able to absorb what could be an additional 2 million barrels a day from Iran, if it materializes,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “Demand from the U.S. has been driving the global consumption recovery.”
There is now confidence that the increasing demand could absorb an additional 2 million barrels of production from Iran. US demand has been the carrier of global consumption recovery.
“The market has clearly tightened up, the strategy that OPEC has played out here is working,” Wayne Gordon, a strategist at UBS AG Wealth Management, said in a Bloomberg Television interview. “We expect that crude oil prices will be at least trading as high as $75 as we go into the start of next year.”
Brent oil for August settlement rose 1.4% to as high as $70.29 a barrel on the London ICE Futures Europe market. West Texas Oil for July futures rose 1.9% to $67.59 a barrel in the Nymex market.
China’s Major Policy Shift
China announced on Monday that married Chinese couples can have up to three children, up from the previous maximum of two, following recent data showing a sharp drop in births in the world’s most populous country.
The Chinese state news agency, Shinhua, announced that the amendment was discussed at the Chinese Communist Party’s Politburo meeting and President Xi Jinping approved the decision.
The main reason for the decision is that the population growth rate in the country has dropped to its lowest level since the 1960s.
Speaking to China’s state news agency, Xinhua, an official noted that the policy change will be implemented in conjunction with supportive measures to help improve the country’s population structure and actively cope with the aging population.
Within the scope of these measures, China will reduce the cost of education for families, increase tax and housing support, protect the legal rights of working women, reduce the practice of high bride price among the public, and provide education for young people on “marriage and love”.
In a poll on Xinhua’s Weibo account asking #AreYouReady for the three-child policy, about 29,000 of 31,000 respondents said they would “never think of it” while the remainder chose among the options: “I’m ready and very eager to do so”, “it’s on my agenda”, or “I’m hesitating and there’s lot to consider”.
However, the poll was later removed.
Following the decision, share prices in birth- and fertility-related companies surged.
