Australian Bond Exchange Weekly Update
21st March 2025
Key Points
- Australia: The Reserve Bank of Australia (RBA) reduced its cash rate by 25 basis points to 4.10% per annum. January’s annual inflation rate stands at 2.5% (trimmed mean: 2.8%), according to the Australian Bureau of Statistics (ABS).
- United States: The Federal Reserve’s cash rate remains between 4.25% – 4.50% per annum, with February inflation at 2.8%.
- United Kingdom: The Bank of England holds its Bank Rate at 4.50% per annum, with January’s inflation rate at 3.0%.
- Eurozone: The European Central Bank’s (ECB) deposit facility rate remains at 2.50% per annum.
Global Cash Rates & Inflation
- Australian unemployment rate remains steady despite a decline in jobs.
- US Federal Reserve maintains interest rates as expected.
- Bank of Japan keeps rates steady, citing global uncertainty.
- Swiss National Bank continues rate cuts, approaching zero.
- Copper prices rise amid Chinese economic measures.
Australian Unemployment Rate Remains Steady Amid Job Decline
Australia’s unemployment rate held steady at 4.1% in February, despite a reported decline of 53,000 jobs over the month, according to ABS data. The labour force participation rate also dropped from 67.3% to 66.8%, reflecting fewer people actively seeking work.
The RBA has previously indicated expectations of a gradual rise in unemployment to 4.2% by mid-2025, aligning with broader projections of a cooling labour market. Wage growth and inflation remain key considerations for future monetary policy decisions.
US Federal Reserve Holds Interest Rates Steady Amid Growth Concerns
Federal Reserve Chairman Jerome Powell stated that it is too early to assess the economic impact of recent policy measures. While inflationary pressures remain a concern, the Fed has revised its outlook, raising inflation projections while lowering growth expectations. Analysts noted that the Fed’s cautious approach was broadly in line with market expectations.
Bank of Japan Maintains Interest Rates, Citing Global Uncertainty
The Bank of Japan (BOJ) opted to keep interest rates steady, highlighting concerns over global economic conditions, including the potential impact of higher U.S. tariffs. BOJ Governor Kazuo Ueda noted rising food prices and wage growth but stated that further economic data would be required before making future policy adjustments.
Swiss National Bank Continues Rate Cuts
The Swiss National Bank (SNB) reduced its main policy rate by 25 basis points to 0.25% per annum, marking its fifth consecutive cut since March 2024. With inflation at a near four-year low of 0.3% in February, the SNB has signaled that rates are likely to remain at this level until at least 2026.
Copper Prices Rise Amid Chinese Economic Measures
China’s government has introduced policies aimed at increasing domestic consumption and boosting incomes. As a result, retail sales grew 4% in the first two months of the year, surpassing forecasts. However, ongoing weakness in the property sector remains a concern.
Copper prices have risen 12% year-to-date, supported by supply constraints and China’s economic measures. Chilean copper producer Codelco has reported lower production levels due to maintenance at its El Teniente mine. While copper prices are often viewed as an economic indicator, analysts suggest that current trends should be considered within the broader market context.
Final Thoughts
As global central banks navigate economic uncertainty, we continue to see a mix of measured pauses and strategic cuts. While the RBA’s decision to lower rates reflects domestic economic shifts, the US Fed maintain a steady stance, signaling a wait-and-see approach. Meanwhile, Switzerland’s ongoing easing and China’s economic stimulus efforts highlight the diverging strategies adopted around the world.
With inflation and job markets playing a crucial role in future policy moves, investors should remain informed on how these developments may influence market trends and portfolio strategies in the months ahead.
*Data accurate as at 21.03.2025
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