Reserve Bank of Australia (RBA), & Governor Philip Lowe

It was a peaceful start for the week compared to previous hectic season amid major economic data and events happening. However, the Aussie (Australian Dollar) kept its momentum moving during Tuesday’s early trading session after RBA kept its interest rate unchanged at 0.75%. Throughout the year, RBA announced three rate cuts in total to support their economy’s downfall.     

However, in today’s statement by Governor Lowe, where the outlook for the country’s economy was little changed from three months ago, it provided an upward momentum for the Aussie. Highlights from the statement include a slight comeback in growth, which is expected to pick up more upward momentum to an estimate of 3% towards the year 2021. Inflation, on the other hand, is expected to rise close to a 2% target for the next two years. Finally, with jobs data, employment and income growth were received the support needed since the bank’s easing in June.    

Despite the slightly bullish tone struck by Lowe, he also emphasized on downside risks, mainly due to US-China trade war and uncertainties which drastically affected global trading and business development around the world. Besides that, interest rates across the globe also remained low, with several central banks continuing to ease their monetary policy.

In a nutshell, the past few months’ expectations toward further monetary easing-over had slowly reduced, while sentiment in the financial market improving as well. The global market is all eyeing towards potential trade truce between the two economic powerhouses, which would provide a strong comeback for many countries.   

Photo credit : aicd.companydirectors.com.au