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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

The Reserve Bank holds its regular monthly board meeting this Tuesday to discuss, among other things, the official cash rate. It is considered to be extremely unlikely that it will decide to change the overnight cash rate despite the Board having cut rates at its previous meeting, and indicating through its forecasts that a further rate cut is likely.

My base case at the moment is that the Reserve Bank cuts the official cash rate again in August following another low CPI number for the June quarter (due for release in late July). There is however a reasonable prospect (say a 35% probability) that if the US Federal Reserve increases rates early (this month) and house prices continue to rise, the RBA may delay or even eliminate altogether any further rate cut.

Source: Rural Bank

 

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