Australia’s spending gap could prompt RBA to cut rates

  • by Ahmed Mamdouh
  • April 2, 2019, 12:28 AM
  • 309 Views
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The graph illustrates that the weak household spending in Australia could add further pressure on the Reserve Bank of Australia to cut interest rates.

“Growth in household consumption is being affected by the protracted period of weakness in real household disposable income and the adjustment in housing markets,” RBA Governor Philip Lowe said in a statement. The RBA will “set monetary policy to support sustainable growth in the economy.”

The RBA left interest rates unchanged at 1.5 percent, moving in line with forecasts, after referring to a potential rate cut last month.

The spending gap could pressure policymakers to reduce interest rates, but the RBA will probably wait until seeing the impact of spending on growth and inflation in the coming period.

The AUDUSD pair fell to a low of 0.7064, set for its second straight daily decline, while the dollar index strengthened to a three-week high of 97.03.

Ahmed Mamdouh

Ahmed Mamdouh is the head of the English Fundamental Analysis at Ofeed.com, with 11 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from the American University in Cairo and a Bachelor Degree in Economics from the Faculty of Economics and Political Science, Cairo University.

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