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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

The UK became the first country to file for divorce from the European Union last week with UK Prime Minister Theresa May formally triggered Article 50 of the Lisbon treaty, beginning the country's two-year negotiation process to exit the European Union. Being the first, many are expecting two years of uncertain negotiations that will test the unity of the European Union and shape the future of Britain’s $3.4 trillion economy, the world’s fifth largest, and determine whether London can keep its place as one of the top two global financial centres.
EU leaders say they do not want to punish Britain but with nationalist, anti-EU parties on the rise across Europe, they cannot afford to give London too-generous divorce settlement terms that might encourage other members to consider breaking away.

The RBA holds its regular monthly board meeting this Tuesday with a no change to monetary policy almost a unanimous view among analysts and economists. The current futures market (Overnight Index Swaps) has squeezed out any chance of a rate cut or hike in the short term (this year) but has a higher cash rate priced in in starting in the first quarter of 2018 (refer chart below).

RBA cash rate

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Source: Rural Bank


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