RBA CASH RATE & THE ECONOMY
MORE HISTORIC LOWS
The Reserve Bank of Australia (RBA) continues to slash the cash rate – creating more historic lows, that seem long-term in nature:
We reached a historic low in July 2019 of 1.0%
As of 2 October 2019, we are now at 0.75% (breaking further records)
It was way back on 3 November 2010 that the RBA increased the cash rate (by 0.25 to 4.75%).
On the back of this news, the Australian dollar has fallen again – reaching GFC levels, with the dollar falling to the lowest against the USD since March 2009.
Main points from the RBA statement:
The global economic outlook is reasonable, but there are critical risks that could cause a downslide
Interest rates are low globally
Borrowing rates are at historic lows (business and household in Australia)
Weaker than expected Australian economic outcome for the year to June 2019
Unemployment remains steady at approx. 5.25%
Slow wage growth
Inflation pressure is subdued, and expected to be under 2% for 2020
The RBA has strongly worded its latest statement towards achieving more employment whilst believing job growth will slow.
Again, while this is good news for mortgage holders, it will concern businesses who import from overseas with the weakening Aussie dollar, particularly against the USD.
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