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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

If you recall, the RBA Governor Lowe signalled a more neutral bias on rates just over a week ago – suggesting the next rate move could be up or down – a significant departure from the previous view that the next move in rates is likely to be a hike. The NAB was the latest bank to change its view on monetary policy last week stating that it no longer expects the RBA to raise rates in late 2020 but now expects the official cash rate to remain on hold, based on the balance of risks. The NAB added that the next move in rates could well be down should GDP fall, inflation remain low and unemployment rises.

Data out this week will provide a check on the RBA’s recently updated scenario for the economic outlook given the RBA governor’s recent speech highlighting a greater significance to “data dependency”. The RBA wants a pick-up in household disposable income to support the consumer and offset the impact from falling house prices. If this pick up doesn’t come from faster wages, continued low unemployment and fiscal stimulus then an RBA rate cut can’t be ruled out.

Markets continue to factor in a 50% probability of an RBA rate cut by the end of this year.

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Source: Rural Bank


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