July economic update: ‘stronger-than-expected’ economic recovery sees RBA ease back on stimulus policies Jul 9, 2021
The Reserve Bank of Australia (RBA) has eased back on some of its stimulus policies by reducing its bond buying program from early September.
In effect, this means the Bank is slightly reducing the stimulus that is keeping mortgage and other borrowing rates extremely low.
Australia’s strong economic recovery encourages easing of stimulus policies
RBA Governor Phillip Lowe said the reduction to bond buying comes as a result of Australia’s ‘stronger-than-expected’ economic recovery.
“The situation today is quite different from that in March last year; we are no longer looking over a cliff but instead transitioning from recovery to expansion,” he said.
Despite scaling back its stimulus policy, the RBA maintained the current cash rate at 0.1%.
“The Board remains committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia,” Governor Lowe said.
In May, the unemployment rate declined once more to 5.1%.
Returns set to end financial year on a double-digit high
As of 30 May 2021, Intrust Super’s Balanced option sits at 15% for the financial year from July 2020.
The month of May’s return of 1.09% marked the eleventh month in a row of positive returns for the Balanced option. Intrust Super members should see a welcome return to double-digit returns for the 2020/21 financial year.
As always, it is important to remember that market volatility is always possible, especially in the current environment. Intrust Super’s portfolio is actively managed and well-diversified, which can reduce the impact of market volatility or returns.
Superannuation is a long-term investment, not a short-term proposition. Over the long-term, the Fund’s Balanced option has returned 8.45% and 7.00% over 10 and 20 years respectively to 30 May 2021.