The Australian sharemarket is set to open higher on Wednesday after the Reserve Bank of Australia’s decision to hold rates steady, despite Wall Street’s mixed performance ahead of the Federal Reserve’s rates verdict tomorrow.
ASX futures were up 0.2% to 8,603.6. The ASX 200 closed 0.5% lower at 8,585.9 yesterday.
The RBA unanimously agreed to keep cash rates at 3.6% yesterday afternoon, in line with analysts’ expectations.
According to RBA Governor Michele Bullock, the central bank did not consider a rate cut at yesterday’s meeting, and does not expect to cut rates for the foreseeable future.
The RBA is prepared to consider a rate hike next year, she said. “If inflation continues to be persistent and looks like it is not coming back down towards the Board's target, then I think that does raise questions about how tight financial conditions are, and the Board might have to consider whether or not it's appropriate to keep interest rates where they are or in fact at some point raise them.”
In the United States, the Dow Jones Industrial Average closed 0.4% lower, and the S&P 500 was down 0.1%. The Nasdaq Composite was up 0.1%.
The Federal Reserve’s final meeting of 2025 is underway, with a decision due at 6 am AEDT on Thursday. The Fed previously cut rates in September and October.
Investors are overwhelmingly expecting the Fed to cut rates by 0.25% tomorrow, according to CME FedWatch.
Annual inflation was 3% in September, well above the Fed’s long-term target of 2%, but economic data releases were suspended amid October and November’s government shutdown.
