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ISCOVER
Jessica Darnbrough
While comments from the Reserve Bank of Australia suggest the Australian economy remains fairly robust, international economies are not faring as well.
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Last week, China, Europe and Britain all took action to spur on growth through rate cuts and/or cash injections.
China's central bank cut its key lending rate by 0.31 per cent to 6.0 per cent while deposits rates were lowered by 0.25 per cent to 3.0 per cent.
This is the second consecutive monthly fall in China's official interest rates which indicates that China's central bank has become more concerned about China's economic slowdown.
In addition, the European Central Bank lowered the key policy interest rate by 0.25 per cent to 0.75 per cent. This is the lowest policy interest rate setting since the ECB began operating in 1998.
Meanwhile, Britain's Central Bank kept interest rates on hold at their historic lows of 0.5 per cent yet decided to further expand their "Asset Purchase program" by £ 50 billion to £ 375 billion.
This spate of rate cuts suggests global confidence is now at an all time low, which could have a significant impact on Australia's cash rate moving forward.
Some economists, including AMP Capital's senior economist Bob Cunneen, now believe the Reserve Bank of Australia will look to cut rates twice more before the end of the year, taking the official cash rate to just 3 per cent.
"Given the RBA Governor's statement highlighted the 'subdued international outlook' and that Australia's inflation is 'expected to be consistent with the target', the central bank still has scope for lower interest rate settings," Mr Cunneen said.
