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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General

The RBA left the cash rate at 1.50% last week as was widely expected with the tone of the accompanying statement remaining positive, in fact, even more positive than last month’s statement. There are no hints in the statement that the RBA have an interest rate cut in mind despite current market pricing to the contrary.

The RBA is still seeing the domestic economy through rose-coloured glasses judging from last week’s communications, reaffirming its forecast for 3% growth this year despite a slower second half of 2018. Of particular interest was the reference to the labour market as a potential source of a stronger economy and it is clear the unemployment rate going forward will be one indicator that will be a focus.

Financial markets however continued the march to cut rates with more analysts jumping on the soft GDP data last week to declare a “per capita recession” and thus the time to cut rates. The most common month to cut rates is December although some are calling a move as early as August.

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Source: Rural Bank

 

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