The economic and interest rate cycle in Australia is quite different to our Canadian cousins, despite the similarity in the structure of the resources-rich, medium-sized economies.
Already a subscriber?Stalling economic growth in Australia, and interest rate cuts in Canada and probably Europe, have been seized on by doves to declare the Reserve Bank of Australia should soon be cutting interest rates to prevent a recession.
Tepid growth like the 0.1 per cent in the March quarter is necessary to rid the economy of excess demand Headline inflation has stopped falling since December and has edged slightly higher in the past two months to 3.6 per cent.If a higher-than-expected June quarter consumer price index is printed on July 31, the RBA board will be leaning towards a rate hike in August – against every dovish bone in its body.
If inflation rises or remains sticky, the RBA “won’t hesitate to move and raise interest rates again”, Bullock said.Threading the needle
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