RBA Recap

• Over the past two months we have seen flurry of central bank activity as the fight against inflation ramps up
• First, we saw the RBA step up its efforts to ‘normalise’ monetary policy by lifting the cash rate by 50bp at their June meeting.
• Then the RBA hiked 50bps for the second meeting in a row in July.
• It has many causal observers questioning what is going on and how did we get from ultra-low and accommodative policy, to central banks waging the biggest war on inflation since the Volcker years.

Market Dynamic

• The last month saw a frenzy of activity as ADIs sought to firm up their position before end of financial year.
• Liquidity came at a premium for ADIs, who saw high levels of loan activity coming through the pipeline.
• Adding greater pressure on bank funding is a decrease in amortisation rates as mortgage owners have less disposable income to put towards their mortgage.
• Term Deposit and NCD rates remained attractive. Reference rates and the dynamic above were the cause.

Investing Considerations

• The current market provides investors with a fantastic opportunity to diversify their portfolio, as more ADIs start searching for funding
• Diversity not only mitigates risk but in. many cases is providing enhanced returns.

The Australian Economy

• Is the Australian Economy heading for a recession?
• A more in depth explanation of the labour market tightness, how high rates will rise and how much monetary policy will be utilised.

Please click here to download the July Monthly