Powered by MOMENTUM MEDIA
subscribe to our newsletter sign up

Commodities weakness could see rates cut

Weakening commodity prices are continuing to be a drag on the Australian economy, investors have been warned, which may result in even further interest rate cuts.

In a note to investors, Fiducian’s investment manager Conrad Burge said that feeble commodity prices were contributing to an "ongoing decline" in Australia’s terms of trade (TOT).

Mr Burge said the March quarter had seen Australia’s TOT fall by 2 per cent, following 2015’s decline of 12 per cent.

The impact of this, said Mr Burge, was that the "real purchasing power of income generated by domestic production" contracted over the year to the end of March.

Mr Burge added that the Reserve Bank of Australia may need to lower interest rates as a result of this, to lower the Australian dollar and increase the nation’s competitiveness on an international level.

The RBA is meeting today, and the outcome of the meeting – including whether the cash rate will move or remain on hold – will be announced at 2.30pm AEST.

Additionally, Mr Burge noted that between 1 January and 29 June, the Australian share market fell 3 per cent, though major share markets seem to be recovering after the shock caused by the result of the UK referendum.

 

Commodities weakness could see rates cut
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Phil - I agree: this is a lawyer looking to promote their business. I am a broker & former bank lending manager, but in both positions , only cross.......
MMMR - This article is about promoting Binding Financial Agreements above all else. I’m just not sure why lending needs to be the vehicle to create the.......
RobR - I am a broker and a former bank manager. As a banker we were told /trained /instructed to cross secure everything possible to "entangle" the client to.......
MT - Banks love to cross-collateralise and tie up clients. Brokers spend their time unwinding cross-collateralisation. A broker will always recommend.......