RBA Delivers a Hawkish Pause, Zuckerberg Takes on Musk
2023.07.05 03:59
It was a relatively quiet session with the US bank holiday naturally weighing on activity and those remaining having an eye on Friday’s jobs report but the day hasn’t been without interest as the opted against hiking interest rates again.
The central bank surprised last time out in raising rates another 25 basis points but this time around, policymakers opted for a hawkish pause. Like many other major central banks – BoE excluded – it has reached a point at which every decision could swing either way depending on recent developments.
Central banks are keen not to overtighten due to the immense pressure past tightening has already put on households and businesses but after being so late to start the process, they desperately don’t want to pause too soon and risk inflicting higher rates for longer which could be much more damaging again.
It would obviously be easier if they had seen more progress to this point but inflation is proving stubborn and economies, so far, very resilient. Further tightening still looks likely at this stage, with markets pricing in a 75% chance that we see that by the August meeting.
Things are going to get more heated between Musk and Zuckerberg
Elon Musk may be aggravating his userbase at just the wrong time, with Meta (NASDAQ:) announcing that it will launch its version of the platform, Threads, on Thursday. It will be a direct competitor to Twitter and, based on released screenshots, look and behave in a very similar fashion.
With Musk desperately trying to push people to pay a subscription fee for Twitter, Threads may offer a simple alternative that may force a rethink of that strategy. Given the userbase Meta already has, Musk can’t afford to underestimate the threat that the new platform poses and it may be very hard to win the audience back if they rapidly switch en masse.
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