Search

« Back to Publications

Vital Signs: goodbye AAA Australia?

Richard Holden writes in The Conversation (8.7.16) about the implications of a credit rating downgrade for Australia’s economy, as flagged by one of the leading ratings agencies.

‘Votes from the Australian federal election continue to be counted, and uncertainty remains on whether the Liberal-National Coalition will be able to form government. But that wasn’t the the only event of note this week.

‘The most predictable (non)-event was the Reserve Bank’s decision to leave the cash rate on hold at 1.75%. This was widely anticipated by markets –in no small part because previous announcements by the RBA basically said they were going to wait for next quarter’s inflation figures before deciding to move.

‘Those figures are out before August’s RBA board meeting. And if they show distressingly low inflation – or deflation, as last quarter’s did – then expect a 25 basis point cut. Bond markets are certainly expecting that.

‘… But the big news was ratings agency Standard & Poor’s placing Australia on negative credit watch on Thursday.

‘Australia is one of a small number of countries that enjoy a AAA rating. That lowers borrowing costs for banks – and hence businesses and consumers.’

The TJRyan Foundation does not guarantee the accuracy, currency or completeness of any information or material available on this website. The TJRyan Foundation reserves the right to change information or material on this website at any time without notice. Links from this site to external, non-TJRyan Foundation websites should not be construed as implying any relationship with and/or endorsement of the external site or its content by the TJR Foundation, nor any commercial relationship with the owners of any external site. Should any TJRyan research project be funded by an individual or organisation the source of funding will be stated beside the research report. In all other cases contributions are provided on a pro bono basis.
Receive the latest news

Subscribe To Our Newsletter

Get notified about new articles

This field is for validation purposes and should be left unchanged.