RBA on hold for July & factors to consider

With so much uncertainty on the local front with the election and the possibility of a hung parliament this may also be a consideration for the RBA to take a conservative wait and see approach. Combine this with Brexit and the possibility of the Bank of England making a move will likely add to the conservative approach by the RBA.

But unlike other central banks worldwide, the RBA is in a position where they do have room to move and cut rates. Other factors that they will be watching closely include:

• The strength of the Australian dollar particularly in relation to added strength from any moves in the EU.
• The U.S Federal Reserve’s reluctance to raise rates as well as the U.S Presidential election in November
• Speculation of our local AAA credit rating being in jeopardy
• Altair’s Chief Economist Steve Roberts also points to another potentially destabilizing event in China, with an apparent rift developing in the upper echelons of the Community Party in China, with a sharp difference of opinion between the President & Premier about handling economic issues especially given an already slowing economy in our largest trading partner, this may be front of mind for the RBA to consider.