Interest Rates

But prolonging a recovery with stimulus could lead to a worse slump later.

Annual wage growth hit its slowest pace in 15 months in the three months to September, completely undermining the Morrison’s government’s expectations of rising growth.

China has made a small but significant trim to a key interest rate ahead of the release of the October economic data starting on Friday.

No rate cut from the Reserve Bank, but there was an admission that we face more than two more years of ultra low interest rates, and possibly a third because the central bank has downgraded its inflation outlook again.

Reserve Bank governor Phillip Lowe has played down claims that more and more Australian homeowners are debt stressed and in trouble with their home loans.

As widely forecast, the Reserve Bank cut its key interest rate at yesterday’s October board meeting, setting the cash rate at a new all-time low of 0.75%, down from 1% which was the previous all-time low and again making it clear that it would continue to cut if need be.

No surge in housing credit, business, and personal credit were again weak – August was, in fact, a month that matched the slide in the momentum in the economy that has emerged from weak retail sales, falling car sales and other lacklustre consumption data.

The RBA is watching events offshore closely and continues to keep the door open to further domestic easing against a backdrop of weak consumption and low wages.

A day after its August business survey confirmed a further slowing in the pace of activity in key parts of the Australian economy, the National Australia Bank has added another rate cut forecast to its outlook.

As expected by the market, the Reserve Bank (RBA) kept its key cash rate steady at 1.0% in September. The bank retained an easing bias in the accompanying policy statement from Governor Phil Lowe and again indicated a willingness to cut the cash rate again should the need arise.

Unconventional monetary policy measures could help the economy, but negative interest rates are unlikely and quantitative easing would be most effective and fairest if combined with fiscal stimulus.

We expect another one or two 0.25% cuts with the next in September but with US recession unlikely this rate-cutting cycle is likely to be limited. Fed and global monetary easing generally should help boost global growth into next year.

Nothing in the inflation data for the three months to June that would cause the Reserve Bank to change its approach to monetary policy.

The June quarter and 2018-19 inflation outcomes will be out this week and with the RBA already making very clear that further rate cuts are on the cards, the data will confirm that inflation remains too low for the central bank.

You can rule out an interest rate cut by the Federal Reserve at the end of this month after the much stronger than expected jobs performance of the US economy in June.

More confirmation that the Australian economy continues to drift towards the edge of a slide with a weak retail sales reading for May and the first fall in job vacancies for over a year.

More rate cuts are on the cards from the Reserve Bank after the central bank cut its cash rate by 0.25% for the second month in a row.

It seems Australia and NZ central banks are lockstep on monetary policy after the latest statement from across the Tasman.

Reserve Bank Governor Philip Lowe has made it clear he wants the federal and state governments to help monetary policy lift the Australian economy, wages and keep employment buoyant.

It wasn’t quite what financial markets had wanted from the Fed – a sort of watch and wait stance with a more obvious bias towards a rate cut, but no rate cut or hint of any timing. Markets wanted more definite news on the timing of a rate cut.

The RBA’s latest rate cut is aimed at heading off a further slowing in growth which would threaten higher unemployment and lower for longer inflation. For investors, it means low-interest rates for even longer.