Interest Rates Are More Likely to Plateau Rather Than Decrease

Continued better than expected economic news saw equity markets move higher in July. Global shares as represented by the MSCI returned 3.29% in Australian dollar terms whilst the Australian share market as represented by the ASX 200 finished 2.88% higher. The Reserve Bank (RBA) left the official cash rate unchanged at 4.10% for the second consecutive month in July despite recognising headline inflation is still too high at 6.0%. The board decided to let the cumulative interest rate hikes of 4% since May 2022 work their way through the economy and so allow time for a more sustainable balance between supply and demand to re-establish itself following the opening of the economy post Covid. According to the Reserve Bank governor, the below-trend economic growth “is expected to continue for a while” with “household consumption weak, as is dwelling investment.” ​​​​​​(Please find the link below to read the full article)

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