The Reserve Bank of Australia (RBA) board held their monthly meeting on Tuesday; retaining the official cash rate at 1 per cent.
RBA Governor, Philip Lowe reports that despite further signs of a turnaround in established housing markets in Sydney and Melbourne; softer economic conditions and heightened global uncertainty could lead to further cuts in coming months.
“Economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low-income growth and declining housing prices and turnover,” he said.
“It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target.”
Financial markets did not expect a further cut to be made today; however, there is strong sentiment predicting a 0.25 percentage drop in November, even some likelihood in October.
Slower than predicted growth in Australia, and with jitters across global markets nervous about the escalating US-China trade war, and the Brexit outcome in October…there is interesting times ahead, and our domestic economy will certainly be impacted by some of these events abroad. The stock market has already shown some vulnerability around the trade war; with China our biggest trading partner, all eyes are focused on the unfolding developments and what its impact will be on our economy.