Market Overview

6 February 2015

Who follows the Reserve Bank of Australia?

The Reserve Bank of Australia (RBA) Tuesday cut its interest rate to a new record low of 2.25%, down from 2.50%. The RBA said that the Aussie remains overvalued, despite the recent decline.

Falling commodity prices and a slowdown of the Chinese economy weigh on the Australia's economy. China is Australia's biggest trading partner.

The Bank of Canada (BoC) lowered its interest decision last month, cutting its interest rate to 0.75% from 1.0%. That was the first interest rate reduction since April 2009. The BoC's interest rate had been at 1.0% since September 2010.

Canada's economy was hit by a decline in oil prices. Crude oil prices dropped more than 55% since last June. That was a reason to cut interest rates.

It's expected that both, the RBA and BoC, could cut their interest rate again in their next monetary policy meeting.

The next central bank that might cut its interest rate could be the Reserve Bank of New Zealand (RBNZ), despite Wednesday's comments by Governor Graeme Wheeler that interest rates will remain on hold "for some time".

Falling commodity prices and a slowdown of the Chinese economy also weigh on the New Zealand's economy. China is New Zealand's second biggest trading partner.

If there are no changes, so we might see an interest rate cut in the next RBNZ monetary policy meeting on March 12.

Konstantin Meinhardt
Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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