Australia Interest Rates
Australia Interest Rates
During the September meeting, the Reserve Bank of Australia lowered its’ official cash (OCR) rate for the third time this year, to a new record low of 0.75 percent, cutting rates by 25 bps. The Reserve Bank has stated the rate cut has been to support employment and income growth for the Australian economy. Aiming to provide greater confidence that inflation will be consistent with the medium-term target.
Furthermore, Australian Policymakers signaled the need for an extended period of low interest rates, stating the central bank is prepared to continue the monetary policy ease if needed.
Interest rate cuts almost always result in the devaluation of a nation’s currency, and it has been no different for this rate cut. With the AUD/USD continuing strong downward movement this month following the Reserve Banks’ announcement. The Aussie dollar currently trading at $0.66985 level.
However, historically monetary policies have proven to be effective only in the short run, as money neutrality takes effect in long-term periods. The idea that money is neutral is derived from economic theory that explains, as a Reserve Bank increases the money supply, it essentially means an increase cash in the consumers pocket, driving up consumption of individuals, in turn pushing prices of goods upwards. Thus, in the long run inflation neutralises the increase in money supply.
While India is dealing with one of the worst health crises in its history, its leading stock indices are holding steady. The stability is likely linked to the rise in heavy commodity prices such as copper and aluminum. Indian heavy industry companies included in these indices are benefiting greatly from the increase in commodity prices. The share price in some heavy manufacturers is up by more than 20% over the month. With the rise in commodity prices, the NRI has strengthened to yearlong highs against the USD. In contrast, the NRI is struggling to gain ground against its other major partners.
The rise in New Zealand house prices over the past 12 months has been extraordinary. As a result, Finance Minister Grant Robertson has moved to increase the scope of the Reserve Bank’s concerns. Moving forward, the Reserve Bank must consider the price of NZ property in conjunction with the other issues it monitors and controls. Since its new mandate, the Reserve Bank has begun to flesh out its understanding of the country’s housing crisis and how it will affect its policy decisions.
Legacy car manufacturers are about to begin producing EVs in earnest. In response, I believe Tesla will soon have to do something drastic to meet shareholder expectations. The price of Tesla shares indicates that shareholders expect Tesla to become the dominant car manufacturer in the world.
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