Economics

The Reserve Bank of Australia’s forecast on rate rises was completely wrong. It’s time the RBA owned up and apologised to households.

New research from BCA Consulting predicts Australian equities will outperform global equities over the next 10 to 15 years.

The Reserve Bank of Australia (RBA) increased interest rates on Tuesday by another 50 basis points, bringing the cash rate to 1.35 per cent as it attempts to rein in soaring inflation.

Australia has thus far remained relatively immune from the inflation challenge occurring around the world, but the 5.1 per cent CPI result in May was met with significant concern from the central bank. While the majority was explicable, being rolling impacts on energy, education and property costs from the pandemic, the Reserve Bank has responded in the same way as most of its global counterparts.

In these uncertain times, global asset manager Capital Group believes its important for advisers to step back and consider the long-term trends that are driving companies and markets. The team recently put together the ten most important themes for investors to consider in the year ahead.

A 50bps interest rate hike by the RBA wasn’t what anyone was expecting. It takes the cash rate to 85bps – well ahead of most economists’ expectations. What are the knock-on effects?

Whilst it is clear that leaving interest rates at an ’emergency’ level isn’t appropriate, it is difficult to believe that the Australian cash rate will be above 3 per cent, as the market predicts, in 2023. A 50-basis point increase in mortgage rates that are in many cases below 2 per cent will hit people and businesses, but most likely property prices, hard. 

Shanghai re-opened on Friday, as it tries to return to business after being in lockdown for two months. The city’s 25 million residents will be celebrating as restrictions are lifted allowing free movement, return to work and a sense of normality as officials claim to have the virus under control. Residents have grown extremely frustrated…

Thanks to the rapid uptake in ‘green’ ESG funds by the wholesale and retail investment community, growth in clean and renewable energy is starting to bend the emissions curve. Yes, progress is being made; but nowhere near the required rate to prevent global temperatures from rising past a safe limit of 1.5 degrees Celsius. Far…

The month of May was a volatile one around the world, but ultimately the US markets finished flat and the S&P/ASX200 only slightly lower. This despite one of the most challenging economic backdrops in multiple years and the growing threat of higher interest rates around the world. So, why are markets seemingly rallying? One of…

Jeremy Grantham’s “wild rumpus” appears to have well and truly begun. But it might only be the beginning of a gloomy period for markets. Jeremy Grantham, chief investment strategist of GMO and part-time prophet of doom, has been unusually quiet of late. One would expect the severe market dislocation we’ve been experiencing since the start…

The Federal Election may well be remembered as one of the most important and unexpected in history. Whilst many had expected a shift away from the traditional parties, few predicted that as many as one in three voters wouldn’t vote for them at all. The popularity of the major parties is both well into the…