Australia has domestic challenges like Canada with an obscenely valued housing market, over-indebted consumers and a strong dollar pushing down on weakening exports. For these reasons slowing global growth presents serious downside risks for the Australian economy. Fortunately, they had more normal policy rates up until now (the overnight rate had been 4.25%) so unlike Canada and the US, the Aussie RBA has some stimulus tools left in the kit to try and moderate liquidity.
Michael McCarthy, Chief Market Strategist, CMC Markets and Matthew Circosta, Economist, Moody’s Analytics discuss the RBA’s surprise move to cut interest rates by 50 basis points.
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