Expect sustained devaluation of the $A
Expect sustained devaluation of the $A. I see interest rates staying at current levels at least until the federal reserve moves rates higher in the US. The inflation figures were positively affected by the carbon tax which pulled down electricity prices. There may be another quarter of this affect. However, in a year I see a sustained devaluation of the $A against the $US and the Chinese currency leading to an elevated level of tradeable inflation. Most currency cover by importers would go through to Christmas trading and be at mid to low 90 cents in $US. Buy March this will fall away. Remember that up to mid 2013 tradeable inflation was negative. It is now 2% positive and there is more to come. So I see no reason to cut rates and in any case there is no evidence in the major economies of the world that lower cash rates would aid growth. @Clime
1 topic