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RBA Seen Holding Fire, Watching Fed as Stevens Makes Final Call

Australia’s central bank is forecast to keep the benchmark interest rate unchanged at Governor Glenn Stevens’s final meeting Tuesday as policy makers hang on the U.S. Federal Reserve’s next move.

Stevens and his board will hold the rate at a record-low 1.5 percent following two cuts in the past four months, said all 26 economists surveyed by Bloomberg. Traders are pricing in a 40 percent chance of further easing by year’s end as they wait to see if U.S. rates rise in September. If the Fed does hike, the Australian dollar will probably fall and remove pressure on incoming Governor Philip Lowe.

“The Fed move is critically important for Australian policy,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney. “If the Fed does nothing this month and comes out with a more dovish commentary then that’s going to put a lot of upward pressure on the Aussie dollar.” Full Story


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