Australia Cuts Interest Rates to a Record Low as Global PMI Falters

As Australia’s Central Bank cuts interest rates to an all-time low, the reasons of the historic move were answered during the RBA Rate Statement that followed the decision from the Monetary Policy Committee. RBA Governor Glenn Stevens stated, “recent data confirmed that inflation remains quite low.” With interest rates low and the Australian dollar remaining elevated according to officials, an aggressive action was merited in order to protect the nation from the potential impacts of deflation. Chief economist at AMP Capital Investors Shane Oliver remarked, “with the inflation numbers so low and the risk that if they didn't cut that the Aussie dollar would have been 76-77 cents by now, they felt they probably had to act."

The shock-waves of the ‘leave’ decision following June’s British referendum continue to spread for the United Kingdom after the latest data from the manufacturing sector showed signs of contraction. The UK Manufacturing PMI, the index that measures the activity level of purchasing managers in the manufacturing sector, reportedly fell to 48.2, well short of analyst projections of 49.1. Even though the Pound took a dive after the bearish data for the manufacturing sector was announced, Sterling has started off strong during early trading on Tuesday in anticipation of the Constructions PMI set to be released at 9:30 GMT.