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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General

The Reserve Bank March Board Minutes released last week look surprisingly like the RBA admitting that if the economy evolves as it expects, they will be lowering rates in the future.  Economic data will need to improve to prevent further cuts and if things continue as they are, the RBA is going to lower rates soon but picking the exact month will prove difficult. The closing paragraph from the minutes of the RBA’s March board meeting released last week included the line that: “it was appropriate to hold interest rates steady for the time being”. The “for the time being” is an indication that further policy moves are likely.

Another spanner in the works last week came from the US Federal Reserve Board, which hinted that they are not going to hike US interest rates soon. This pushed the US Dollar lower and gave the Australian dollar a boost – something that might make it a little easier for the RBA to cut rates.

In the end, I expect a rising unemployment rate to win out over the strength in housing and force further cuts from the RBA.  At present, May seems the most likely timing, given its close proximity to the next Statement of Monetary Policy which follows soon thereafter. But I can’t rule out any month at this stage – and certainly not April.


Source: Rural Bank


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