US Rate Meeting

World financial markets are holding their collective breaths in anticipation of an announcement on the direction of US interest rates after tonights FOMC meeting.

Last week we highlighted comments made in a speech by US Fed Chairman Greenspan hinting towards a cut in rates in the very near future. Financial markets reacted immediately by slashing bond yields with the US ten year bond yield falling to 4.55%.

Any cut by the US would provide our Reserve Bank with an opportunity of cutting the domestic rate. However given current strong levels of domestic demand and the continuing lingering threat of inflation rising through imports on the back of a relatively weak AUD do not expect a cut in our rates as a foregone conclusion.

Advertisement