RBA Delivers Much Needed Stimulus

In what was close to a line ball decision - according to market economists surveyed and Interbank Cash Rate Futures - the RBA cut the cash rate by 25 basis point cut to 1.75%. Strong disinflationary forces evident in the March quarter CPI print would have tilted the central bank's view on the outlook for the economy and interest rates. Even with the overdue monetary stimulus delivered, Australia's cash rate of 1.75% remains well above other advanced economies. Australia's annual core inflation rate is now lower than in the US, while the unemployment rate of 5.8% has been higher than the US for a while now. But the cash rate is 150 basis points above the federal funds rate! As long as the RBA and APRA are satisfied that lending standards for housing remain prudent, Evidente expects the central bank to deliver another rate cut this year, most likely in August. (VIEW LINK)

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