As expected the Reserve Bank of Australia (RBA) cut interest rates by 25 basis points on Tuesday, taking the cash rate to 1.25%. We take a look at the economic indicators in conjunction with Governor Lowe’s comments to help determine what the most likely action is for the RBA. Given... Show More
The Reserve Bank of Australia opted to leave interest rates on hold. But with key parts of the economy in decline, it may be just a matter of time before it has to cut again. The question is: how effective will a rate cut be? It’s generally folly to predict whether... Show More
Week in Review The escalation in US-China trade tensions continued to dominate global market sentiment last week, with bond yields dropping lower and equities prices generally pulling back. That said, the fallout from the escalation in trade measures has been contained by continual US assurances that talks are ongoing and a... Show More
Surprisingly weak Australian inflation has led to expectations the Reserve Bank will soon cut rates. But what’s driving low inflation? Is it really that bad? Why not just lower the inflation target? Will rate cuts help? And what does it mean for investors? Inflation surprises on the downside again Australian inflation as... Show More
In the AFR today I reveal that very senior industry participants believe the RBA and APRA are considering a targeted alternative to a cut to the official cash rate, which would involve lowering the minimum 7.25 per cent interest rate banks use when assessing a home loan borrower’s repayment capacity... Show More
After 27 years, the Australian economy is finally facing a recession. Neither monetary nor fiscal policy look set to save it and yet again we appear highly dependent on a Chinese surprise. The outlook for the Australian economy is bleak. Gross domestic product and consumption growth are expected to fall. The... Show More
The Australian economy performed well during 2018 with rising GDP, lower unemployment and stable inflation. Despite this, the outlook for 2019 is not as positive, as a number of factors are beginning to point to downside in the Reserve Bank of Australia (RBA) achieving their policy mandate including low inflation,... Show More
I always think of periods of market volatility as manageable brush fires - while still causing market nervousness they’re actually better for the long-term market structure as they lower the risk of a serious bush fire. For the Australian market the latest ‘brush fires’ were the result of market nervousness... Show More
Chris Rands, Portfolio Manager at Nikko Asset Management, believes that rates are unlikely to rise significantly from current levels. With debt at very high levels across the world, servicing that debt would raise major challenges, which could steady the hand of central bankers. “In Australia, it’s the household sector; in the... Show More
Mortgage interest rates in Australia have increased in recent months, despite a steady cash rate. Domestic mortgage rates are heavily influenced by a combination of factors in addition to the official cash rate, and two we’re going to focus on in this paper are the banks’ exposure to domestic and... Show More
