Fiscal stimulus now, monetary stimulus in November

This week’s Australian Budget injected another huge dose of fiscal stimulus. Some of the measures may not be quite as effective as those in earlier rounds of stimulus but taken together Australia’s fiscal response is one of the most aggressive in the world. Meanwhile, the RBA this week signalled that further monetary stimulus may be unleashed before long – we think it will pull the trigger at its next meeting in November. With both fiscal and monetary policy being loosened further, we believe that Australia’s economy will expand faster than most expect next year.