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7 Oct 2013
Australia to enter new growth cycle? What it means for the RBA?
FXstreet.com (Barcelona) - While it may not represent a surprise at all, given his impeccable track-record as Australian central banker, Glenn Stevens may be in the midst of yet again, pulling it off as the Australian economy gets out of the woods and potentially creates a new growth cycle, as the country continues to show signs of a tentative recovery.
Case for a credible Australian economic rebound
According to James Glynn, Editor at the WSJ, "several recent indicators are spurring hope that the slowdown is ending." As Glynn argues "Australia’s manufacturing sector expanded for the first time in more than two years in September, while house prices rose strongly in August and retail sales beat expectations. The data followed news of a surge in consumer and business confidence since the Sept. 7 federal election, when the conservative coalition turfed out the Labor government."
Additional signs RBA forced to stay on the neutral/hawkish camp?
For the sake of reminding FXstret.com readership about recent key changes observed in Australia, last week we published an article titled 'two developing stories in Australia to bear in mind', in which the main take-aways were the significant shift seen in Australia's soaring house prices and the willingness by the new government to increase fiscal spending.
On Glynn's article tilted 'Proactive Central Bank is Behind Australia’s Rebound', he thinks that despite "evidence of recovery is still tentative, odds are rising that Australia’s record of 22-y without recession is set to extend through another growth cycle", adding that "while the bank has not ruled out further rate cuts, but it looks increasingly likely that the easing cycle is over."
RBA statement remains neutral and banks delaying prospects of rate cut
In its last policy meeting, the RBA left rates at 2.5%, while keeping the statement very much 'neutral'.
It was only last week that two major Australian-based banking institutions, NAB and Westpac, revised their rate cut calls from November to currently expect the next interest rate cut in February. The delay on expectation for further rate cuts strengthens the notion of possible further revision towards a less dovish RBA, as the tentative transition to a more growth-oriented policies by the RBA takes effect.
Case for a credible Australian economic rebound
According to James Glynn, Editor at the WSJ, "several recent indicators are spurring hope that the slowdown is ending." As Glynn argues "Australia’s manufacturing sector expanded for the first time in more than two years in September, while house prices rose strongly in August and retail sales beat expectations. The data followed news of a surge in consumer and business confidence since the Sept. 7 federal election, when the conservative coalition turfed out the Labor government."
Additional signs RBA forced to stay on the neutral/hawkish camp?
For the sake of reminding FXstret.com readership about recent key changes observed in Australia, last week we published an article titled 'two developing stories in Australia to bear in mind', in which the main take-aways were the significant shift seen in Australia's soaring house prices and the willingness by the new government to increase fiscal spending.
On Glynn's article tilted 'Proactive Central Bank is Behind Australia’s Rebound', he thinks that despite "evidence of recovery is still tentative, odds are rising that Australia’s record of 22-y without recession is set to extend through another growth cycle", adding that "while the bank has not ruled out further rate cuts, but it looks increasingly likely that the easing cycle is over."
RBA statement remains neutral and banks delaying prospects of rate cut
In its last policy meeting, the RBA left rates at 2.5%, while keeping the statement very much 'neutral'.
It was only last week that two major Australian-based banking institutions, NAB and Westpac, revised their rate cut calls from November to currently expect the next interest rate cut in February. The delay on expectation for further rate cuts strengthens the notion of possible further revision towards a less dovish RBA, as the tentative transition to a more growth-oriented policies by the RBA takes effect.