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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, Commodities

While higher than expected, last week’s September quarter CPI wasn’t a knock-out for the Reserve Bank of Australia (RBA), particularly given the changed outlook for US monetary policy, however the associated high Australian Dollar is causing some headaches for the RBA.

With the US Government kicking the can down the road with regard to negotiations on the debt ceiling and the US Federal Reserve tapering now seen to be delayed, the near-term outlook for global financial markets is somewhat clouded. For now, tapering is delayed but not abandoned and as such, much of the re-pricing in bonds, equities and currencies is probably due to re-positioning rather than a significant change in the bigger picture.

In my view the probability of a rate cut in early 2014 has gone from 10% to something closer to 30%. A lot however will depend on the uncertain timing of Fed tapering and the extent to which the persistently high Australian Dollar eats into the domestic growth outlook.

Source: www.ruralbank.com.au

 

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