Why Australia’s productivity ‘wart’ may limit interest rate cuts
In the longer term it is difficult to square sluggish productivity growth against inflation remaining close to the middle of the RBA 2-3 per cent target range.
Financial markets currently attach a probability of around 80 per cent to a further 25 basis point cut when the Reserve Bank next meets on July 7-8.
Fair enough. I think the balance of probabilities is tilted toward a policy rate reduction at that meeting, even if I’m less certain than the bond market appears to be.
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Stephen Miller is an investment strategy advisor to GSFM and formerly a Treasury officer who served on the personal staff of the then-treasurer Paul Keating from 1985 to 1987.
