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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General

As was widely expected after the recent CPI data release, the RBA cut rates last week and the Australian dollar actually rose after the RBA announcement - this result highlights the increasingly challenging environment in which central banks are operating. Their decisions, though carefully considered are not necessarily reflected across the broader economy.

The May and August rate cuts likely mark the end of the RBA’s actions for now (and possibly for the rest of this year), with the “okay” tone to the activity data and the broadly “as expected” June CPI data giving the RBA the luxury of some time to assess the outlook. The financial futures market is now looking forward and has a further 25 basis points of rate cuts priced in by May 2017.

Implied cash rate from futures market

Implied cash rate from futures market

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Source: Rural Bank

 

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