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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

Investors around the world are no doubt awaiting what the US Federal Reserve will do on interest rates late this month with bated breath. Even if you have little direct exposure to American assets, the US Federal Reserve is after all the world's de facto central bank - so what its chairman says and does is likely to impact our market as well.

The Fed is in a bit of an odd spot now as economic data doesn't really mandate a US rate cut but markets are pricing in a decent chance of adverse economic outcomes going forward and so the Fed seems somewhat forced to deliver. On top of that, we have Trump tweeting that US Fed has got it wrong and rates should have been cut six months ago.

Whatever the US delivers this month, it will be the first of many US rate cuts to come before the end of 2019. There is an old saying: “when the US sneezes, the rest of the world catches a cold” which could imply that other global central banks will follow the US lead – although the RBA has already delivered two cuts.

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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