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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, Commodities

The Reserve Bank of Australia surprised no one last week with its decision to leave the official cash rate unchanged at 2.50%, maintaining its neutral monetary policy stance. The accompanying statement by the Reserve Bank Governor after the Bank’s monthly board meeting repeats the previous month’s guidance that “the most prudent course is likely to be a period of stability in interest rates”.

The main change this month was the partial retreat on the previous neutral guidance on the Australian Dollar by adding the comment “the exchange rate remains high by historical standards.” which confirms that the RBA’s preference is for a lower Aussie over any further reduction in interest rates.

Financial markets have almost fully discounted any possibility of another rate cut but similarly, the market is deferring any potential rate hikes till late this year.



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