To recommend whether the cash rate should be decreased, increased or should remain unchanged. The main purpose of this recommendation is to satisfy the three main objectives of the Reserve Bank of Australia. We look at the some of the factors that affects the RBA cash rate such as International economic conditions, domestic conditions of Australia and the stability of financial markets in Australia.
International economic conditions:
One of the major issue that Reserve bank of Australia should take into account is the effect of the International economic conditions. If we focus on the United States housing market, Prices are performing well. The most closely watched index on home prices is the S&P/Case Shiller index, which showed home …show more content…
The Australian Stock Exchange (ASX) is Australia’s financial market. In recent times the ASX has not been very strong, where shares have been underperforming.
Attention has now shifted towards China and other emerging economies, where they have caused much volatility and uneven returns across asset classes. Factors such as higher levels of debt, lower commodity prices, fiscal pressure and political instability have also contributed to this. The impact of this are higher levels of risk in the global financial system, resulting in investors not being so quick to choose where to put their money in.
In more recent activities (11th April 2016), reporter Vanessa Desloires writes in an article “Further falls in the big banks and weakness in the major supermarket owners overwhelmed solid gains in energy and mining stocks to drive shares lower on Monday.” Despite a 6% surge over the weekend of Brent crude oil prices, adding 1.6% to the energy sector, the banks remain trapped by a negative sentiment. According to Desloires, “National Australia Bank fell the most, down 0.8 per cent to $24.93. ANZ Banking Group fell 0.1 per cent to $22.25, Westpac Banking Corporation fell 0.4 per cent to $28.42 and Commonwealth Bank of Australia fell 0.1 per cent to
International economic conditions:
One of the major issue that Reserve bank of Australia should take into account is the effect of the International economic conditions. If we focus on the United States housing market, Prices are performing well. The most closely watched index on home prices is the S&P/Case Shiller index, which showed home …show more content…
The Australian Stock Exchange (ASX) is Australia’s financial market. In recent times the ASX has not been very strong, where shares have been underperforming.
Attention has now shifted towards China and other emerging economies, where they have caused much volatility and uneven returns across asset classes. Factors such as higher levels of debt, lower commodity prices, fiscal pressure and political instability have also contributed to this. The impact of this are higher levels of risk in the global financial system, resulting in investors not being so quick to choose where to put their money in.
In more recent activities (11th April 2016), reporter Vanessa Desloires writes in an article “Further falls in the big banks and weakness in the major supermarket owners overwhelmed solid gains in energy and mining stocks to drive shares lower on Monday.” Despite a 6% surge over the weekend of Brent crude oil prices, adding 1.6% to the energy sector, the banks remain trapped by a negative sentiment. According to Desloires, “National Australia Bank fell the most, down 0.8 per cent to $24.93. ANZ Banking Group fell 0.1 per cent to $22.25, Westpac Banking Corporation fell 0.4 per cent to $28.42 and Commonwealth Bank of Australia fell 0.1 per cent to