As per the monetary policy decision on September 4, 2018, the governor of the central bank of Australia decided to keep the rates unchanged at 1.50%. According to him, China’s growth has been witnessing a marginal downward momentum and the regulatory bodies have been deciding to ease the policy. However, they do have in mind the risks that the financial sector is exposed to. On the global basis, the inflation has been low. However, in some of the economies, the inflation has witnessed an increase and the trend might continue because of the labor markets.
As far as trade-related things are concerned, Australia seems to perform well as the positive momentum has been witnessed from the past few years on the back of higher commodity prices. However, the central bank expects that this momentum might witness a downward trend moving forward still, they would relatively be higher. The central bank is optimistic about the conditions in the labor market as the economy’s unemployment rate stood at 5.3%. According to the central bank, the inflation stands at approximately 2%.
What Impact Could Different Monetary Policies in the US and Australia Bring?
The US Federal Reserve has raised its federal fund rate in its September 2018 meeting. The central body brought the target range to 2-2.25%, as expected by the global players and market participants. What makes Federal Reserve to do so? The strong US economy, as well as economic growth, are some of the factors which that have acted as catalysts. On the other hand, the cash rate in Australia still stands at 1.50% which is significantly low in comparison to that in the United States.
The US Federal Reserve has been maintaining its hawkish view in regard to the monetary policy since December 2015. However, the recent rate hike marks the eighth one within the time span of three years. On the other hand, the Reserve Bank of Australia or RBA has been maintaining the cash rate of 1.5% for more than 2 years. Since the time when the Reserve Bank of Australia has been looking to control inflation, this gap between the official rates of the US and of Australia is the widest.
After the recent hike by the US Federal Reserve, the official rates of the US are higher by 0.75% as compared to Australia. Moving forward, it is expected that the Australian dollar might witness the negative impacts i.e. it could depreciate against the US dollar. The reasons that RBA has not been increasing the rates could be that they are still waiting for the wage growth as well as pressures of inflation. However, the fall in the Australian dollar could help to boost the domestic economic growth.
The Income available from dividends remains attractive for many investors.
We take a look at the best yields on the market and assess what they say about a company’s prospect.
One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”
ASX-relevant Special Reports are published year-round to provide a detailed analysis into an investing opportunity or a potential risk to your portfolio.
Click here to get your free report.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.