There has been an incredible amount of momentum behind the Commonwealth Bank of Australia (ASX: CBA) share price this year, rallying 26.5% from $83.40 on 1 January to a record close of $105.50 by 17 June.
Ever since its record highs, the CBA share price has been grinding sideways. CBA shares have edged 0.21% lower in July.
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Why the CBA share price is moving sideways
Sydney lockdowns weigh on economic recovery
The Reserve Bank of Australia (RBA) released its August monetary policy meeting minutes on Tuesday. The RBA flagged that the Australian economy was likely going to contract in the third quarter of 2021.
"The economic recovery in Australia has been stronger than was earlier expected. The recent outbreaks of the virus are, however, interrupting the recovery and GDP is expected to decline in the September quarter."
The slowdown in near-term growth and heightened uncertainty could be a factor weighing on sentiment for the CBA share price.
Despite the near-term concerns, the central bank remains positive that the economy will pick up from where it left off.
"The experience to date has been that once virus outbreaks are contained, the economy bounces back quickly. Prior to the current virus outbreaks, the Australian economy had considerable momentum and it is still expected to grow strongly again next year. "
Lending indicators fall in June
The Australian Bureau of Statistics (ABS) has revealed that new loan commitments in housing and personal segments fell in June.
ABS figures show that new loan commitments for housing fell 1.6% month on month to $32.05 billion.
This represents the first month-on-month decline in 2021. However, still a significant 82.7% higher compared to a year ago.
Similarly, personal fixed-term loans fell sharply, down 12.6% month on month to $1.74 billion, but 16.8% higher year on year.
In June, the CBA share price went full circle, rallying 5.15% from $100.72 to a record close of $105.50 on 17 June, before closing 0.84% lower at $99.87 at the end of the month.
Conflicting interest rate expectations
The CBA share price took a sharp 7.41% tumble between 17 and 21 June.
Headlining the sell-off was news that the US Federal Reserve expected to potentially increase interest rates by late 2023. This is instead of its previous forecast of at least 2024.
Back at home, Westpac Banking Corp (ASX: WBC) also lifted its interest rate expectations, pointing to a potential rate hike from the RBA by Q1 2023.
CBA share price snapshot
Despite the recent lack of traction, the CBA share price is still up an impressive 22.14% year to date.
A near-term catalyst for the company's shares could be its upcoming full year FY21 results on Wednesday 11 August.
