The Reserve Bank held the cash rate at 1.50% when it met last week. Rates are unlikely to move this year unless something dramatic happens. The statement released by the RBA expects the domestic economy to return to "reasonable growth" in the December quarter after the weak September quarter negative GDP growth data thereby avoiding a "technical" recession.
RBA's future growth trajectory is steady at around 3% and inflation remains at the low end with headline inflation expected to rise above 2 %. The bank expects labour market indicators to strengthen. All this points to a steady monetary policy for the current year and we do not expect any change in the cash rate until into 2018.
Chinese growth which is so intricately linked to the Australian economy was stronger in the second half of 2016 and the Bank expects that this data will continue to boost Australia's national income.
Housing sector continues to be the area of concern for the bank. The bank expects that rental growth is going to be the slowest for a couple of decades and additional supply of apartments coming in the market will have a bearing on house prices. In our opinion, Sydney house prices are expected to flat line in 2017 and in to 2018. The tax concessions in super ending on 1 July may have a bearing on the investors who may cash in on the profit and move the profits to super to take advantage of the concessional tax treatment.
RBA's future growth trajectory is steady at around 3% and inflation remains at the low end with headline inflation expected to rise above 2 %. The bank expects labour market indicators to strengthen. All this points to a steady monetary policy for the current year and we do not expect any change in the cash rate until into 2018.
Chinese growth which is so intricately linked to the Australian economy was stronger in the second half of 2016 and the Bank expects that this data will continue to boost Australia's national income.
Housing sector continues to be the area of concern for the bank. The bank expects that rental growth is going to be the slowest for a couple of decades and additional supply of apartments coming in the market will have a bearing on house prices. In our opinion, Sydney house prices are expected to flat line in 2017 and in to 2018. The tax concessions in super ending on 1 July may have a bearing on the investors who may cash in on the profit and move the profits to super to take advantage of the concessional tax treatment.
TRUMP TALKS UP US ECONOMY WITH TAX INCENTIVES
The World is coming to terms with the new Trump presidency in the US. Considerable chaos plagues the administration with Trump's executive orders on travel bans from 7 Muslim dominated countries, the promise on constructing the wall across the southern border with Mexico, signalling repeal of Obama Health care and the green light on some pipeline infrastructure projects which were stopped by the Obama administration due to concerns with environment.
The stock markets are up with Trump talking up phenomenal tax cuts to the industry and the Dow is lapping it up rising from 17000s in November to close at 20269 as of last Friday.
The stock markets are up with Trump talking up phenomenal tax cuts to the industry and the Dow is lapping it up rising from 17000s in November to close at 20269 as of last Friday.
MARKET DATA
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Industrial Average Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) Iron Ore | 10 Feb 2017 1.50 1.77 2.71 2.41 0.7645 0.7170 86.92 5.2582 5720 2316 20269 3196 56.70 1233 84.11 | 3 Feb 2017 1.50 1.77 2.78 2.48 0.7644 0.7128 86.50 5.2574 5621 2297 20071 3156 55.72 1235 82.19 | 1 year ago 2.00 2.28 2.42 1.75 0.7104 0.6288 80.08 4.6704 4698 1864 15973 2763 33.36 1237 42.34 |
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