Economic Outlook
Outlook
Global economic data remains positive and supportive of shares. Solid business and consumer surveys as well as strong jobs growth suggest that the global economy has considerable momentum in early 2018.
Central banks were quiet in April by keeping interest rates on hold. However solid US economic activity and emerging inflation pressures suggest further interest rate increases by the Federal Reserve (FED) this year.
Australia’s economic data releases remain modest and mixed. Business confidence surveys are positive. Consumer sentiment is improving while retail spending has rebounded. However jobs growth has recently moderated after a strong performance last year. Price pressures are still subdued with annual inflation at 1.9% for the March quarter. This has allowed the Reserve Bank to keep the cash interest rate on hold at 1.5 % for 18 consecutive meetings, including at its April meeting where it signalled that a near-term rate hike is unlikely. With GDP growth likely to stay below potential and inflation to remain subdued, the first rate rise is unlikely until late 2019. But as RBA Governor Philip Lowe cautioned, “the last increase in the cash rate was more than seven years ago, so an increase will come as a shock to some people”.
Important Information
This publication is produced by the MLC Investment Policy Team and issued by MLC Wealth Management Ltd and its related companies and entities for the intended informational use by financial advisers. Whilst due care has been taken in preparing this report, Australian National Consulting, ANC Wealth and MLC does not warrant or represent that the information, opinions or conclusions contained in this report are accurate, reliable, complete or current. This report is general information only and has been prepared without taking into account an investor’s individual objectives, financial situation or needs. The report should not be taken to contain securities advice or recommendations. Past performance is no indication of future performance.