The Big Picture: Interest rates and the G20 summit
As we wake to the first Monday of spring and the feeling of optimism that the warmer weather brings, what is in store for Australian and international markets?
Interest Rates announcement
This Tuesday, Governor Glenn Stevens will preside over his last meeting of the Reserve Bank of Australia. With current deputy Dr Philip Lowe set to take the reins on 18 September, there is little chance that Stevens will move the cash rate as a parting gift following 10 years in the top job.
As such, you can expect that tomorrow afternoon the underlying figure to remain at 1.5%.
Incoming Reserve Bank Governor, Dr Philip Lowe
The G20 meets
More interesting conversations are happening north of the equator as world leaders gather in Hangzhou for the bi-annual G20 summit. Two years on from Brisbane’s turn as host, the global economy looks more bleak than ever.
Back in 2014, Prime Minister Tony Abbott and Treasurer Joe Hockey convinced the group of stagnating economies to commit to at least 2% of growth over the next five years.
This was agreed to despite any clear description of how the outcome was to be achieved – a major concern when almost every imaginable lever has been used since the GFC, and the world is swimming in unserviceable debt and trillions of dollars of ‘fiscal stimulus’ that has artificially inflated markets to the point where many economists doubt their integrity.
The Hangzhou summit will be largely concerned with reducing and minimising trade barriers to ensure money can easily wash around the globe. This is a crucial time – wedged between the Brexit and the US election – with a mood of increased protectionism moving across the world as economies give up on globalisation in order to save themselves.
The only people that will help is politicians. It’s far too late to put the international genie back in the trade bottle. Needless to say, President Xie will act as a gracious host intent on ensuring other members recognise that the slowing of the Chinese economy is under control, and that the they will continue on a path of global investment.
Today’s meeting will close with moderate outcomes and beneficial dialogue (as well as numerous bilaterals). Just don’t ask about the South China Sea. It’s never good to embarrass the host.
Have you considered taking your product or service to an overseas market
The National Press Club is holding a Local Gin Degustation dinner on Sat
Join Jayne Hrdlicka, president and chair of Tennis Australia, and Louise