Economic and Financial Market Update: The RBA & Looking For Rainbows

Summary:

• The RBA kept the cash rate at 0.75% following the February meeting;
• The tone of the upcoming statement was a little more upbeat;
• The RBA made it clear they will cut rates again if needed.

'It never rains but what it pours

If lady luck should happen to desert you'

- Judy Garland

The great Judy Garland hasn't been the only person who has ever said it never rains but it pours. The latest surely are those that follow the economy. The Tweens decade was one characterised by disappointing income growth. Every time the economy started to power up something happened to slow things down again. In recent years that has included an overly aggressive Federal Reserve, a US-China Trade War and (most recently) the Chinese coronavirus. Domestically there has been the bushfires. The big picture has been the unwinding of the mining boom.

The RBA provided an update of its economic view following the February meeting (more details will be included in Governor Lowe's speech and the quarterly Statement of Monetary Policy). As expected the RBA kept rates unchanged. The RBA is forecasting better times ahead. But it also made it clear it will cut rates again if those times do not arrive.

Below is a comparison of their latest views with the last time the RBA updated its economic thoughts (November).

Global Economy