Australian shares surged to a record closing high on Wednesday, supported by growing speculation the Reserve Bank of Australia will cut official interest rates and launch quantitative easing (QE) next year.
The benchmark S&P/ASX 200 jumped 63.1 points, or 0.9 per cent, to a record closing high of 6850.6, less than 0.4 per cent below the record intraday high set in late July. The broader All Ordinaries rose 60.8 points, or 0.88 per cent, to 6,950.6 points.
Following a speech from RBA governor Philip Lowe on Tuesday evening that outlined what could prompt the bank to implement unconventional monetary policy measures to support economic growth, lower unemployment and push underlying inflation higher, the benchmark rose in early trade and kept on going, finding additional support as Westpac Bank became the first of Australia’s big four banks to forecast the RBA will introduce QE next year.
“Westpac now expects two rate cuts next year from the RBA, with the cash rate cut to 0.25 per cent in June 2020,” Westpac chief economist Bill Evans told clients. “Quantitative easing is also expected to begin in the second half of 2020.”