Speculation Amidst Talks on Cash Cuts by Reserve Bank of Australia

Reserve Bank of Australia

The entire Australian economy is in a state of upheaval. With the year still moving in a flux.  In a move that has invited unending questions and forecasts, the RBA is said to have set to cut cash rates to affect desired outcomes; higher inflation, higher wages and lower unemployment.

The already fallen rate, which was brought down with 1.25 % will say a further cut to boost the economy, if RBA has its say, conjectured market experts. RBA governor Philip Lowe’s statement has given rise to a new inquiry and speculation among market players and honchos, with talks on the possibilities of reduction and the pros and cons of the same. The speculation is whether or not the RBA will announce a further cut.

With some predicting at least four cuts in the financial cycle, this could really turn the economy, to what, still remains to be seen. The central body aims to change the present unemployment situation, plaguing them and it wants to see rate down closer 4.5 per cent.

Morgan Stanley’s economics team believes the RBA won’t cut on anytime soon, although noting there is a negligible difference, economically speaking, between a July and August cut. “We think the RBA communication is less definitive than the market assumes, with the door still open to a pause in July as is our forecast,” Morgan Stanley’s Chris Read said. Slowing down on the cuts will allow for a more stable and “gradual cutting cycle” according to him.

After a statement like this, there has been an uproar in the market, with many anticipating results aand fearing the impact of this on trade.