Australian shares are set to open lower, following New York’s lead, amid heightening worries about growth. RBA policy meeting in focus. Follow updates here.
Australian shares are expected to open lower on Monday, tracking a decline on Wall Street after a surprisingly strong US job report dashed hopes of a softer pace of Federal Reserve interest rate increases, and speculation the Reserve Bank of Australia will lift its benchmark by a lofty increment.
The RBA will be in focus this week. Markets are overwhelmingly convinced of a 0.4 percentage point increase on Tuesday, which would take the cash rate to 0.75 per cent. Thelast month, lifting the record low benchmark by 25 basis points in response to 20-year-high inflation of 5.1 per cent in the first quarter.
Governor Philip Lowe said he favoured a quarter-point increase because of the RBA’s “historical practice of changing the cash rate in increments of at least 25 basis points”. He acknowledged that an “argument for an increase of 40 basis points could be made given the upside risks to inflation and the current very low level of interest rates”.
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