The Reserve Bank Board met on Melbourne Cup day, Tuesday 3rd November, and kept official interest rates on hold at 2%.
Since last month’s meeting, key data continues to indicate the Australian economy is growing at a moderate pace.
Inflation at 1.5%
The most recent inflation rate reading of 1.5% shows demand in the economy is weaker than forecast.
The growing challenge, globally, of achieving preferred inflation outcomes could also now become an Australian problem.
Business and consumer confidence up
Modest improvements in both business and consumer confidence have been encouraging, however the consumer confidence survey has remained below 100 for 18 of the last 20 monthly readings, indicating a level of pessimism and inactivity.
Australian dollar predicted to fall
It is our view that the Australian dollar will go lower, closer to 63 US cents by April next year.
Weak commodity prices
Weak commodity prices impacting the national income and household income. Global demand for commodities remains soft as indicated by further rate cuts and stimulatory measures by the Chinese central bank.
Macquarie believes the RBA continues to assess the outlook and will cut interest rates over the coming months.
The next RBA board meeting will be held on Tuesday 1st December.