Internet Banking

News

Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

While most of the focus for the last few months has been on the US, Europe (or more specifically Greece) came under the microscope once again over the weekend. At a meeting of Eurozone finance ministers last Friday, parties were unable to find a compromise on discussions around additional funding for Greece. The IMF is looking for more austerity, which the Greek government is not accepting, and debt relief, which Germany is not in favour of. Parties are trying to finalise the negotiations by the end of February, ahead of national elections in the Netherlands, France, Germany, and potentially Italy, later this year – so watch this space.

Locally, last week’s low December quarter CPI data has seen financial markets unwind previous expectations of a rate hike, but only slightly. The overriding factor still influencing our market is the forecast of two and possibly even three US rate hikes this year, which is placing a floor under any potential rate cut by the RBA here. The futures market still expects the next move in rates by the RBA as being up, but not until 2018 (refer chart below).

Interbank futures pricing of the cash rate

Interbank futures pricing of the cash rate


View the full newsletter (PDF, 322KB)

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 Limited 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 Limited ABN 74 083 938 416 AFSL 238042.