The Australian economy has been feeling the strain of late with a slip in house prices, increased unemployment and a cut in interest rates to a record low of 1pc. As a huge exporter of natural goods the bitter US-China trade war may be having an ongoing impact as China is a key importer of Australian natural resources.

China is in the midst of its slowest economic expansion in three decades and the Chinese Yuan continues to slide in value posting a fresh 11 year low on Monday. Dr Adam Triggs of the Australian National University’s Asian Bureau of Economic Research points to this Trade War as a huge contributor to the Australian economy’s recent stalling “We trade a lot more than most countries and we rely on foreign money for investment, so when you start to get international turbulence we feel that a lot more than others.”

The ongoing concerns around the Chinese economy and its drop in demand for Australian goods has meant that GBP has managed to regain a footing above 1.80 on the interbank level despite the Brexit chaos Boris Johnson has been inflicting since taking over as Prime Minister.

Australian unemployment falls in December

Is the RBA considering Quantitative Easing?

As Australians interest rates follow the global trend of cuts there has been much speculation over the RBA’s next step in efforts to aid a flagging economy. For some time Westpac has led calls for the Reserve Bank to consider a further cut to 0.5% while Deutsche Bank says it expects the cash rate to drop to just 0.25% by as early as the end of this year. However, Philip Lowe the governor of the RBA has ignited a debate over whether Quantitative Easing would be the next step for the RBA In the face of an economic crisis when he commented “we are prepared to do unconventional things if the economy warranted it” when questioned in Parliament. Please contact us to discuss any upcoming requirements in further detail.

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