The RBA meets for the first time for two months on 7 February. Monetary policy and whether or not the Reserve Bank of Australia will be adjusting interest rates any time soon will return to centre stage. At the moment, the futures market is giving a tiny chance of an interest rate cut in the next few months and beyond that is in fact pricing in the prospect for interest rate hikes from the middle of 2018.
The RBA will be looking favourably on the strength in commodity prices, will have trepidation about the on-going strength in house prices, but will be somewhat concerned about record low inflation and wages growth. High unemployment is also a factor to keep rate hikes off the near term agenda. Perhaps for the RBA it is best to sit tight until the mix of these factors tilt one way or the other – interest rates are on hold for the near term.
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