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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

After the last board meeting the RBA noted that, "it is reasonable to expect that an extended period of low interest rates will be required to reduce unemployment and achieve the inflation target." That kind of commentary, in particular the words "extended period" was used by both the US Federal Reserve and the European Central Bank to describe low monetary policy settings before ultimately adopting a range of other policy measures, including quantitative easing (QE).

While there is more talk in markets about a 0.50% cash rate by early next year and some even discussing an official cash rate that is lower or negative, it probably remains "unlikely" in Australia. That said, last week’s volatility and increased chatter about a possible global recession, keeps financial markets on their toes at the moment.

The above commentary instead suggests the RBA, in consultation with the government, will probably consider and embark on a path of unconventional policy settings and fiscal stimulus including QE and government spending before Australia gets to this position.

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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