I must say that the decision by the RBA to leave rates as a stand still is one that leaves me wondering what is up their sleeves given the atmosphere around the world and particularly stemming from Europe. I would have expected a 0.25 drop if nothing more because leaving the rate at its current 4.25% probably might be sending the message that 'we still have our fundamentals in check'. It could obviously turn out to be the best decision for the economy a few months down the line, but if growth stalls and unemployment figures fail to stack up to expectation, I think then that the bank might have to carefully reconsider. Economic growth in Australia still does depend quite considerably on the international state of economic atmosphere and as such, I am yet to hear of very convincing positive rebounds. But then again maybe things will pick up with time as Europe strengthens itself and US makes some flexes. I am also hoping that Chinese lawmakers will continue to hold that economy together as they have managed to do these last few months even amidst of signs of weaknesses in local demand which for us translates to diminishing import figures.
I want to trust that RBA has got better advised information to have been able to make the decision it did in freezing rates but then again who else can we look up to?
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