RBA confident in recent property market recovery
In line with Market expectations, which had priced a 2% chance of an adjustment, the RBA kept rates on hold at 0.75%. Following today’s release, markets are pricing an 18% chance of an additional rate cut in December and a 42% cut to 0.50% in February 2020.
Markets generally were unaffected by the hold on rates and the commentary which indicated that while a marginal upswing in the housing market in the past month was recorded, a lack of consumer spending continued to be an area of uncertainty and a lift in wages was required in order for inflation to reach the targeted range of 2-3 percent.
The influence of drought in particular regions was identified as a potential risk in the future and the ongoing US-China trade and technology disputes was stated to have negatively influenced international trade flows and resulted in businesses scaling back spending plans due to uncertainty.
The central scenario held by the RBA for the Australian economy is to see growth of around 2.25% this year followed by a gradual increase to around 3% by 2021. Expectations are that low interest rates, recent tax cuts, ongoing infrastructure spending, an improved outlook for the resource sector and a continued upswing in the domestic housing market should support growth.
For the full statement please view here or paste this link into your search window: https://www.rba.gov.au/media-releases/2019/mr-19-29.html
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