Latest national accounts and labour market data confirm the slowing of the Australian economy. In response, the Reserve Bank cut the cash rate by 0.25% to a new low of 2.25% on 3 February. Financial markets widely expected the Bank would cut again on 3 March, but they were disappointed. However, the accompanying statement from the Governor suggested that further interest rate cuts are likely and the markets continue to expect this over coming months. The statement also indicated that higher unemployment and a still high Australian dollar are key factors behind the Bank’s thinking.

Overall conditions in the US economy continue to look favourable and speculation persists about when the Fed will start to lift interest rates. Latest Fed statements suggest they may hold off a while longer than previously expected but a move by the second half of the year still seems most likely.

In Europe, the Greek situation seems to have been defused, for the moment at least, with the government acceding to a number of demands from the Eurozone authorities. There were some signs of improvement in European growth and the ECB revised up its growth expectations on the back of its QE programme, lower oil prices and the weaker euro.

Chinese authorities announced a revised growth target of around 7% and the latest PMI showed some improvement. The central bank eased monetary policy further.