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The Reserve Bank has a renewed focus on financial stability, where the benefit of lower rates in achieving the inflation target and full employment is weighed against the longer-term risk of adding to already-high household debt. 

We’ve analysed the impact of an assumed 1% shock to Chinese growth on Australia to estimate the potential impact of the virus coronavirus on Australia’s economy.

The government has introduced travel restrictions on arrivals from mainland China and advised Australians to avoid travelling to China because of the novel coronavirus.

The market has substantially reduced pricing for a February interest rate cut following the surprise improvement in the unemployment rate last week

Calculating confidence intervals around cash rate futures pricing and the Reserve Bank’s economic forecasts, we estimated an average probability of QE through to mid-2021 of about one-third. 

The Mid-Year Economic and Fiscal Outlook (MYEFO) released today reveals downgrades to the economic outlook.

Markets have been calm overnight, in wait and see mode ahead of a series of more important events this week.

The Reserve Bank’s persistent overestimation of growth likely reflects not allowing for the decline in potential growth.

President Trump has upset markets further today suggesting that the trade deal with China might be left till after the US election, a year away.