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June interest rate market update

The Reserve Bank of Australia (RBA) has left the cash rate at a historic low for the month of June.

It’s interesting to observe the RBA’s delicate balancing act, with economic data showing two very different aspects of the economy. On the one hand, we have a property market that is very robust with a recent history of strong price increases. We’ve also got solid economic growth above 3% and low unemployment rates. Consumer confidence and business trading conditions are strong. But on the other hand, we’re experiencing almost no inflation, minimal wage growth and low business capital expenditure.

It was widely expected that the RBA would keep rates on hold this month, however many economists are expecting a further rate cut later on this year. Much will be pivoting off the release of the quarterly inflation data on 27 July, with the market expecting the RBA to react aggressively to weak numbers by cutting rates. Stronger numbers, however, will lead the RBA to wait for further guidance on where to take interest rate policy.

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