Australia: Significant policy easing keeps proving necessary - Westpac

Westpac analysts point out that this week has brought a double policy benefit to Australia in the form of a cut in the cash rate from the RBA and the passage of the Federal Government’s tax plan.

Key Quotes

“Data has however highlighted that such support remains a necessity.”

“In justifying their decision to cut for a second time in as many months to a new historic low of 1.00%, the RBA again focused on Australia’s labour market and the need for it to strengthen. Unemployment and underemployment both remain well above the levels the RBA see as consistent with full employment. Hence, if wages growth is to accelerate, GDP growth must rise back to trend or above and labour market slack be reduced.”

“While the RBA looks set to hold onto their expectation of trend growth in 2020 for now, by November we believe they will have to revise this forecast down and, in doing so, will justify another cut.”

“The risk to this view is that two rather than one cut is necessary by year end, and subsequently that the RBA may have to investigate the other policy options available to it.”

“Data released for Australia the week highlight the need for further support for our economy. Retail sales rose a disappointing 0.1% in May to be essentially unchanged over two months.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD consolidates around 1.1150 amid mixed trade headlines

EUR/USD is trading around 1.1150, consolidating previous gains. President Trump has expressed optimism about clinching a deal with China, while some officials have cast doubts. Brexit headlines are set to impact the euro as well.


GBP/USD hovers below 1.30 ahead of critical vote on the Brexit deal

GBP/USD is trading just below 1.30 as parliament is set to debate and vote on UK PM Johnson's Brexit deal. The vote on the program to complete the process quickly is also critical. 


USD/JPY holds steady above mid-108.00s

The USD/JPY pair failed to capitalize on the early uptick to multi-day tops and is currently placed at the lower end of its daily trading range, just above mid-108.00s.


Gold: Choppy inside monthly trendline, 200-bar SMA

Gold’s repeated failures to cross 200-bar Simple Moving Average (SMA) fails to portray the yellow metal’s weakness as the monthly trend line limits its downside. The Bullion presently tests the support line while flashing $1,483.55.

Gold News

Brexit drama does not deter the pound

Despite an unending series of Parliamentary setbacks for Prime Minister Boris Johnson’s attempt to clinch the UK exit from the European Union, Sterling has retained almost all of its gains of the past ten days, suggesting that his Brexit deal will eventually be approved.

Read more