Last night, the Reserve Bank of Australia published the minutes of its latest meeting, which took place on the day of the US presidential election, says Volkmar Baur, FX analyst at Commerzbank.
RBA sees risks on both sides
“The minutes show that the central bank was aware of the uncertainties arising from international circumstances. Specifically, a sharp change in US economic policy and the size of the Chinese government’s stimulus package were cited as sources of uncertainty, which at that time had not yet been announced. The risks have more or less materialized in both cases.”
“While the outcome of the US elections and the nominations of the US president-elect so far point to a rather unconventional economic policy, the Chinese stimulus package has been quite disappointing, especially as regards to the property market. Despite international headwinds, the Australian economy remains robust. Although growth has been somewhat disappointing of late, the labor market remains tight, employment growth remains strong and wage growth is correspondingly good. “
“All of this contributes to inflation continuing to move slowly towards the RBA’s target. The RBA therefore reiterated that it is comfortable with the current level of interest rates and sees risks on both sides. I continue to hope that a more “Weaker next year will lead the RBA to move faster than the market currently expects, which should weigh on the AUD. The materialization of risks in the international environment certainly supports this view.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
