Expect caution with future rate rises
Boutique asset manager Kardinia Capital is optimistic about the outlook for the Australian economy and does not expect interest rates to rise dramatically over the next five years.
Kardinia’s portfolio manager, Kristiaan Rehder, said markets would potentially remain volatile in the short term, but central bankers would not want to jeopardise the recovery and therefore he expected them to proceed very cautiously in implementing any tapering of monetary stimulus.
“In terms of the next 12 months, we don’t see much risk,” he said.
“We previously thought that the RBA cash rate would hit a ceiling of around 2.5%, now it’s likely to be lower than that, which probably means that the RBA has less room to move during the next economic downturn.”
Growth in new job ads and in the housing market indicated businesses and consumers were “looking through the lockdown”, he added.
“The best way I think to look at equities at the moment is that it’s almost as though the recession never happened,” he said.
“We have sprung back so quickly with this V-shaped recovery that we are back on trend. And perhaps we are more at the end of this elongated long mature cycle that we have experienced since 2009.”
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