Anxiety subsiding but RBA pauses rate hikes amid downside risks for the economy

Stock markets are moving cautiously higher again on Tuesday as anxiety continues to subside in the aftermath of last month’s mini-banking crisis.

RBA pauses amid fears over spending and lags in monetary policy

The RBA paused its tightening cycle today, citing various concerns including a substantial slowdown in household spending, the lag from recent rate hikes, and the stress in US and European banks. While inflation remains far too high and further hikes may be warranted – no longer “will” – it would appear the Australian central bank has now reached the point at which additional tightening will be very uncomfortable and risk tipping the economy into recession, or worse, deepening it.

They aren’t the only central bank to find themselves at that juncture. In fact, most others are either there or very close to that point, and recent strain in the banking sector has highlighted the downside risks of further significant tightening. We may see most now proceed with caution and only tighten if absolutely necessary. The time for pause and consideration may have arrived.

Bitcoin remains choppy but holding onto gains

We’re continuing to see choppy trading around $28,000 in bitcoin, a level reached in the aftermath of the mini-banking crisis and held onto ever since. Where it goes from here is hard to say as no one would be surprised to see another surge but logic perhaps suggests a pullback would make more sense, and the technicals may back that up.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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