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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General

Cutting straight to the chase, the statement following the US Federal Reserve Board meeting last week has left the possibility of a September rate hike clearly on the table, without significantly advancing the case for the commencement of US rate hikes.

Whether the US Fed will increase rates as early as September will depend on the flow of economic data and other information between now and the September meeting, but we can be sure that US rates will go up before year-end. As a result, markets have stabilised with bond yields, equities and the US dollar rising last week.

The big question remains whether the markets will wind back their expectations of another rate cut from the RBA if US rates are on the rise. For now, expectations are unchanged with 50% probability of one more rate cut by December still priced into the local futures market.

Source: Rural Bank

 

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