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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

RBA Governor Phillip Lowe spoke in Adelaide last week on “The Labour Market and Spare Capacity” where he gave a clear signal that more policy easing is coming, and he implied that it’s going to be “imminent”. The final few paragraphs of his speech were significant with the Governor stating that "the most recent data … do not suggest we are making any inroads into the economy's spare capacity” and “Given this … it is not unrealistic to expect a further reduction in the cash rate.”

This was enough to convince me, and financial markets to now believe there is a good case for a follow-up RBA rate cut and have brought forward the next move in monetary policy by the RBA to July from August with the terminal cash rate now below 0.75% fully priced by the end of the year (refer chart).

Futures Market Pricing Cash Rate

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Source: Rural Bank

 

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