Australia: Need to find common ground on fiscal repair and delivering reform - ANZ

Research Team at ANZ, notes that yesterday S&P put Australia’s AAA sovereign rating on negative-watch.

Key Quotes

“This didn’t come as much of a surprise given that speculation around the credit rating has escalated over recent years, with the lack of significant delivered fiscal reform and an increasingly fractious political environment. The main effects of the announcement are likely to be via monetary policy (suggesting some additional impetus for the RBA to cut in August, even though that has been our call) and some funding costs for those entities linked to the sovereign ceiling.

In our view, the S&P announcement is sending a message that the policymakers need to work harder on finding common ground on fiscal repair and delivering reform.”