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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General

The US mid-term elections were the main focus for markets last week with both Republicans and Democrats claiming a victory. In other news, monetary policy also remained in view, with the RBA, RBNZ and US Federal Reserve all meeting and leaving official rates unchanged.

The official cash rate in Australia has now remained unchanged at 1.50% for two years and three months, a new record.

The RBA’s post board meeting statement last week surprised markets with a more optimistic outlook. The Governor’s media release continued to state that “the low level of interest rates is continuing to support the Australian economy.” GDP growth has been revised up and “with the economy growing above trend, a further reduction in the unemployment rate is expected to around 4.75% in 2020”. Stronger growth and lower unemployment flowed through into the outlook for inflation, where the “central scenario is for inflation to be 2.25% in 2019 and a bit higher in the following year.”

Despite all this upbeat talk however, markets still don’t see the cash rate moving from 1.50% any time soon.

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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