Overview
There is no question that the Australian economy is in a state
of flux. These are challenging conditions for policymakers due to
the conflicting signals that currently prevail. Never was this more
evident than early last month (June 5) when the Reserve Bank of
Australia (RBA) decided to cut the benchmark interest rate again by
0.25% to "be a little more supportive of domestic
activity". The very next day, the March quarter economic
growth figure came in at 1.3% (4.3% over the year), which was
significantly higher than the RBA and markets were expecting.
While it is true that the GDP number is backward looking - and
indeed a lot has happened since the end of March - it is equally
true that our view of the economy is impacted by our perceptions.
NSW has a significant financial services employment base and so it
is no real surprise that sentiment is rather downbeat, reflecting
the poor state of financial markets and the corresponding
downsizing that has
