RATES ON HOLD

The RBA has opted to leave the official cash rate on hold at 1.5%.

As lenders continue with their out of cycle rate increases, at its board meeting today the Reserve Bank of Australia decided to leave the official cash rate unchanged.

This follows new data released yesterday that indicates the strong Sydney and Melbourne property markets may be close to peaking following APRA's intervention into the levels of interest only and investment lending the banks are funding.

It also appears the Reserve Bank is waiting to gauge the impact of next Tuesday's federal budget on overall economic sentiment.

Rates: Where do we go from here?

The RBA provided no surprises following its April board meeting leaving the official cash rate on hold at 1.5%. The RBA remains more confident regarding global growth, see Australian economic growth as moderate, regards the labour market as being mixed, sees a gradual rise in underlying inflation and continues to see conditions in the housing market as varying considerably across the country, but sees recent regulatory measures as reducing the risks associated with high and rising household debt.

This note looks at the outlook for the cash rate, the impact of bank rate hikes and the implications for investors. Read more here

Rates Remain On Hold

As expected, the Reserve Bank of Australia decided to keep interest rates on hold at 1.5%. But according to Macquarie, we can expect two more cuts this year before economic economic conditions begin to turn around. Watch here.

Rick Maggi

honeymoon over?

Since the US election last November, US and global shares rallied around 8% and Australian shares rallied around 12%. But with Trump now inaugurated as President we are at a point where that optimism is being tested. Read on...

The US Presidential Election

The attached note looks at the US Presidential and congressional elections that are looming large, especially now that the polls between Donald Trump and Hillary clinton are neck and neck.

Read more here.

Interest Rates Steady

The RBA has resolved to keep interest rates on hold at 1.5 per cent ahead of a possible US rate hike on 21 September and the release of Australian CPI figures on 26 October.

As expected, RBA governor Glenn Stevens’ final meeting before handing over the reins to his successor Philip Lowe proved to be uneventful.

The decision to keep rates on hold was in line with market expectations, with the ASX 30 Day Interbank Cash Rate Futures September 2016 contract pricing in a 95 per cent chance of ‘no change’ to the cash rate.

UBS chief economist Scott Haslem said the RBA is likely to remain on hold for the “foreseeable future” given firm growth data, a likely lower trend in the Australian dollar and concern about financial stability.

“While inflation will remain low, core inflation is likely to drift modestly higher from here,” Mr Haslem said.

The ANU Centre for Applied Macroeconomics Analysis (CAMA) Shadow Board attached a 57 per cent probability to 1.5 per cent being the correct policy setting.

“The CAMA RBA Shadow Board clearly believes that the cash rate should not be cut any further,” said the Shadow Board. “After the RBA’s decision in August to cut the cash rate to a historic low of 1.5 per cent, there is good reason to pause.

“Unemployment fell slightly, but only because of a large increase in part-time employment. With consumer price inflation equaling 1 per cent year-on-year, well below the RBA’s 2-3 per cent target band, and wage growth a modest 2.1 per cent year-on-year, there exist little immediate inflationary pressures,” said the Shadow Board.

Rick Maggi

Scams: Be Aware

More than 105,000 scams were reported to the Australian Competition and Consumer Commission (ACCC) last year, resulting in losses of more than $84 million. And that's just the tip of the iceberg: many more scams went unreported, often because the victim was too embarrassed to tell authorities about the crime.

To help combat the increasing number of scams, Macquarie Bank have compiled a list of the 12 most common ones they've come across.

See the list here

UK votes to leave

With UK voters narrowly voting to leave the EU markets, and Prime Minister David Cameron announcing his resignation, markets are reacting quite negatively to the news, as expected.

As outlined in the email the blog post below, the ‘Leave' vote will create a period of instability over the coming days and weeks, creating a potential buying opportunity in the short term. This may also add to the case for the RBA to cut interest rates, which was likely to happen anyway.

We’ll continue to monitor the situation, but in the meantime, it is important not to get too perturbed by the media frenzy as this is likely to be a storm in a teacup.

Enjoy your weekend (and stay away from the newspapers!).

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

Brexit: Stay or Leave?

A balanced summary of the pros and cons of a Brexit ahead of tomorrow's vote. Enjoy! Read more here

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.

History on the run...

When news breaks and markets move, content-starved media often invite talking heads to muse on the repercussions. Knowing the difference between this speculative opinion and actual facts can help investors keep their nerve.

Read more here

The Economy: Not so bad

The past few weeks have been messy with Brexit, the Australian election, terrorist attacks and an attempted coup in Turkey. But rather than dwelling on what's happened so far this year, this article gives us 9 reasons why the future may begin to look a little brighter. A good read!

Read more here

REASONS TO BE CHEERFUL

AMP Capital's Dr Shane Oliver cuts through some of the current pessimism and finds some good, credible reasons to be optimistic. Be aware of the usual seasonal weakness, but don't let it paralyse you with fear... Read more here

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.