The RBA has decided to keep interest rates on hold this afternoon which was largely against market expectations.
We are still of the opinion we will see an interest rate cut or two by June. If this were to play out we would see investors search for income returns elsewhere ie Buying bank stocks as opposed to having their money sit in the bank. This would in turn provide price support for Australian Shares.
That said we believe being overweight to defensive assets such as cash and fixed interest is appropriate given the current state of the world economy. We are looking for evidence of a sustained recovery in the US and Europe to come to a decision on Greek austerity measures (they couldn't come to on last night). We have one eye on China who's growth figures have been improving of late.
As always we will keep you updated of any changes to the portfolio. If you have any questions or require clarity on the above please feel free to contact the office.
