A.M. Notes

Research evidence excerpt

A.M. Notes

was a necessary move to continue on the path of policy

normalization. Will there be more? Yes. We've had a second rate hike in the books

for quite some time and it is still there ... expect another hike in September to

1.25%, with a risk of an earlier move. And that view was supported by Deputy

Governor Uchida, who stood in for Governor Ueda, who is still recovering in the

hospital from a hepatic cyst infection. "Regardingthequestionoffallingbehind

thecurve,ourbasicapproachistocontinueraisingpolicyinterestrateswhile

adjustingthedegreeofmonetaryeasing.” Perhaps the language wasn't strong

enough; perhaps it was the watering down of the hawkish move with the

reference to being "nimble" and will up its JGB purchases if necessary although

that annoying part is not new. And how did the JPY react? It softened a tad... was

hovering around ¥160.1 before the announcement; now it is ¥160.3.

The Reserve Bank of Australia took a break (must be exhausting to hike three

meetings in a row in this environment) at this month's policy meeting. As

expected, it left the cash rate at a near two-year high of 4.35%, after having

raised it in February, March and May. The decision was unanimous. Remember

what Governor Bullock said back in May... all three hikes gave the RBA “space

nowtositandseewhathappens”. Well, that is clearly what it did but it is not

going to sit on its laurels. In the Media Release, it warned of "signsthatsome

firmsexperiencingcostpressuresareincreasingthepricesoftheirgoodsand

servicesandothersarelookingtodoso". In fact, this is layered on top of "high

inflationrecordedaroundthestartof2026", so one cannot simply point to the

SoH's closure (though it is supposed to be opening this Friday, June 19). Gotta

give it to the RBA... clear communication....