- Reserve Bank of Australia
The Reserve Bank of Australia said growth likely slowed in the second quarter, while the Australian Dollar continues to offer little assistance. The RBA lowered borrowing costs two times this year as it attempted to accelerate a transition towards service and manufacturing industries as a decade-long mining boom continues to fade. However, the flipside of the easy policy is emergence of a housing bubble in Sydney and Melbourne. Thus, the central bank would prefer a weaker currency to increase competitiveness of local businesses. As to the nation's labour market, minutes from the most recent meeting of the RBA showed the board was positive about the direction of the unemployment rate, which climbed just slightly from a revised 5.9% in May to 6% in June. Employment growth had accelerated over the year to exceed the rate of population growth in Australia. Nevertheless, the RBA expects only a modest growth of employment in the coming months. The central bank also noted wage growth remained weak, while inflation pressures were well contained and likely to remain so. Additionally, the minutes showed that non-mining business investment remains sluggish and that surveys of business investment intentions indicate it will remain weak over the coming year.
Traders are pricing in a less than 20% chance of a rate cut next month, rising to about 50% by year's end.
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