- NAB
Australia's business confidence remained unchanged in April, as sharp falls in the wholesale and construction sectors were offset by improved confidence in mining. NAB's business confidence gauge came in at 3 index points for the second consecutive month in April, after a rise from zero in February. Business conditions, meanwhile, slid from 6 to 4 points. Businesses remained reluctant to invest in new capacity, despite some signs of a pick-up in consumer sentiment.
Separately, the National Australia Bank expected the RBA to hold interest rates unchanged for some time and hike them eventually in 2016. The recent rate cut announced by central bank may be the last one as the ongoing improvement in the Australian economy will force policy makers to stay on hold for some time and shift to a rate hike stance by late 2016. While the nation's economy is still struggling with the effect of declining mining investment on domestic demand, as well as low commodity prices, which undermine government finances, depreciation in the Australian Dollar will help the economy. In order to underpin the economy, the Reserve Bank of Australia cut the official cash rate by 25 basis points to a historic low of 2.0%. Some economists as well as central bankers have argued that too much monetary easing can be counterproductive, with the potential to sharpen, rather than smoothen out, imbalances in the economy.
© Dukascopy Bank SA