Australia’s Q3 GDP Data Released—Quarter-on-Quarter Growth of 0.4%

Doesn’t sound like much? Economist David Bassanese begs to differ. His assessment: demand is genuinely expanding.

A closer look at the data reveals that this round of growth isn’t being driven by a single engine. Business investment is ramping up, consumer spending remains strong, the housing market is recovering, and even public spending is picking up. When businesses are willing to spend, it shows confidence in the future; active consumption means people have money in their pockets and are willing to spend; when real estate moves, the entire upstream and downstream supply chain benefits; increased government spending and the launch of infrastructure projects accelerate economic circulation.

The result of this multi-pronged approach? Rate cuts? Now less likely.

Why? Rate cuts are typically a shot in the arm from the central bank when the economy is sluggish. But with so many growth drivers in Australia’s economy and demand still on the rise, there’s little reason for the central bank to ease monetary policy further. Market expectations are shifting: the probability of the Reserve Bank of Australia acting in the short term is now quite low.

Of course, the economy is never set in stone. How will the international situation evolve? Could policies suddenly shift? What will happen with inflation data in the coming months? Any of these variables could change the game. It’s clearly not prudent to predict future policy direction based on a single quarter’s GDP data.

Keeping a close eye on subsequent data releases is the right approach. After all, in financial markets, the difference between expectations and actual data is often more valuable than the numbers themselves.