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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, Commodities

The Reserve Bank of Australia (RBA) kept the Official Cash Rate unchanged after their monthly Board meeting last Tuesday, remaining at the historic low of 2.25%. The RBA was concerned that further cuts to stimulate a weak economy might stoke unsustainable growth in house prices. The RBA Board decided to save its monetary policy stimulus for a later date, as local shares and capital city house prices appeared poised to set new record highs last week. Most economists as well as investors had been expecting the RBA to cut rates by 25 basis points to 2% so the “no change” announcement sent the market into a sell-off, with shares falling and yields rising by as much as 15 basis points.

Despite the sell-off, markets are still factoring in a lower cash rate, with a full rate cut factored in by May, however every RBA Board meeting is now “live” for a possible rate cut.

Source: Rural Bank


Disclaimer: Whilst all care has been taken in compiling the information, the information should not be relied upon as substitute for professional advice where necessary. Rural Bank accepts no responsibility for the accuracy, completeness or timeliness of the information and disclaims all liability in relation to any loss or damage suffered by the use of or reliance upon any information contained herein or in any attachment or annexure hereto by any person. Rural Bank – A Division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879