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21.05.201912:27 Forex Analysis & Reviews: The Central Bank of Australia signals a decrease in rates in June

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Exchange Rates 21.05.2019 analysis

The Central Bank of Australia will consider lowering interest rates next month to support the economy, head of the Central Bank Philip Lowe said, calling on the recently re-elected government to make its contribution by reducing income taxes and increasing spending. "The lower rate will promote employment growth and bring closer the time when inflation will meet the goal. Given these factors, at our meeting in two weeks, we will consider the issue of lowering interest rates," said Lowe. The reduction will be the first after the Reserve Bank of Australia (RBA) in August 2016 lowered rates to a record low of 1.50%.

Investors and analysts welcomed this move, saying that it could help revitalize the housing market in the country. The main result of the changes should be a significant increase in the maximum volume of loans for the purchase of real estate. Australian economic growth has slowed to 0.8% year on year, and there are signs that the recession will continue. Inflation also remains below the RBA target range of 2-3%, while the unemployment rate has risen to an eight-month high of 5.2%. Lowe pointed to the slowdown in household consumption as the main cause of the economic downturn. The head of the Central Bank called on the government to help accelerate economic growth, including through additional fiscal support, infrastructure spending and changes in government policies to increase business investment.

Irina Maksimova
Analytical expert of InstaForex
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