Australia Interest Rates

by Oct 2, 2019Market Reviews

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.

Related Posts

NZD, AUD Claw Back Up Amid Weakening US Dollar

NZD, AUD Claw Back Up Amid Weakening US Dollar

The New Zealand Dollar is fighting it’s way back up as the country enters it’s first official day of nationwide lockdown. It posted a 0.67% gain for the trading day, up to 0.58390 cents against the US Dollar. Just a week ago the NZD had dropped to 0.56, and looked ready to hit the 55 cent mark, as news broke of Air New Zealand’s layoffs.

read more

Black Bull Group Limited (trading name: BlackBull Markets) is a New Zealand registered and incorporated company (company number: 5463921). We are also registered with the Financial Services Provider Register (number: FSP403326).

Black Bull Group UK Limited is registered in United Kingdom, Company Number - 9556804. Payment clearing services provided by: BlackBull Group UK Limited (Company Number - 9556804) Address - 483 Green Lanes, London, Greater London, United Kingdom, N13 48S

Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.

Copyright © 2020 Black Bull Group Limited. All Rights Reserved.

Share This