The global economy is being criticised from all sides, and Australia just said it loudly. On Monday, Treasurer Jim Chalmers told ABC TV that the combination of Israeli airstrikes against Iran and Iran’s counterattack made things worse in an already volatile global climate.
“The global economy is a rather dangerous place right now,” Jim said, describing the moment as “dangerous.” He pointed to rising oil prices since Friday attacked as one major signal that troubles were coming quickly.
Australian traders have betted hard on rate cuts, not because inflation is over, and not because growth risks are now worsening.
The military battle between Israel and Iran will reach its fourth day on Monday, with fears rising that a wider war will erupt, particularly in the Middle East, where Iran is one of the biggest oil producers.
The oil shock pushes interest rate reduction measures high
Oil jumped shortly after an Israeli attack struck Iran’s nuclear site. As Iran is the ninth largest oil producer in 2023, supply disruptions were enough to rattle the energy market. Currently, the global oil supply is at risk, which directly affects all energy-dependent prices.
The traders responded immediately. The betting market is currently allocating a 90% chance that the Reserve Bank of Australia (RBA) will offer the third 0.25% interest rate cut this year. This will result in a cash interest rate of 3.6%. Two more rate cuts are then expected, and the final rate will be 3.1%.
The gym too I said Central banks like the RBA are looking to see beyond the short-term price surge. “Usually, the reserve banks are not just ourselves, but central banks, central banks, but they try to look at temporary spikes in prices and consider the broader meaning,” he said. But their meanings are beginning to accumulate quickly.
The Treasury is currently tracking not only the battle between Iran and Israel, but other triggers as well. Jim listed US tariff tensions, the Ukraine-Russian war, and China’s slowdown. This is very important as China remains Australia’s largest trading partner. “Australia is well placed and ready to deal with all this uncertainty and volatility,” Jim said. “But we are not immune from that point.”
Most economists in the region are less aggressive than the market. They are hoping for two more cuts in August and November at 3.35% year-end cash rate. It’s still on Australia Rate-cut cycles are driven by concerns that the economy could stall under external pressure.
As fear spreads faster, global markets react
The conflict has not only hurt oil. It has dragged financial markets worldwide. Stocks fell across all key metrics as investors moved out of dangerous assets. Gold prices have risen as expected. Every time geopolitical fear takes over, investors move to gold for safety. It is a hedge that they trust during inflation, war, or market collapse.
The US dollar also rose sharply. Investors ran to the greenback as they always do during the crisis. The so-called “dollar smile” effect unfolds once more. Dollar I’ll win.
This time it was obtained for currencies that are normally considered safe, such as the Swiss franc and the Japanese yen.
Jim will give a full speech at the National Press Club on Wednesday, and will outline the government’s second term plan in a speech entitled “Our Second Term Economic Agenda.”
The ruling Labour Party, which won a major victory on May 3rd, now has full control to develop its economic strategy. But all eyes are about how to handle external shocks that are stacked faster than expected.
Your Crypto News is worthy of attention – Key Difference Wire Place you on over 250 top sites
