Reserve Bank of Australia
- Measures of global trade uncertainty are at 50-year highs.Risk for Australia would be if US tariffs triggered a global trade war.Markets realising that trade uncertainty could see firms and households batten down the hatches.Such ‘watchful waiting’ could prove economically damaging in aggregate.Possibility of such an effect played a part in the RBA’s February rate cut.February rate cut reduced the risks of inflation undershooting the 2.5% target.Board does not currently share market confidence that a sequence of further rate cuts will be required.Progress on inflation has been good, but too soon to declare victory.Judge that labour market conditions will remain relatively tight over forecast period.Recognise risk we have overestimated tightness of labour market.
more to come
This article was written by Eamonn Sheridan at www.forexlive.com.
