RBA likely to ease policy in August following a shocking 'Brexit'

The Reserve Bank of Australia is likely to adopt easing in its monetary policy stance by August, following a persistent low inflation amid a shocking decision by the United Kingdom to leave the premises of the European Union.

" We also think the AUD/USD will be important in shaping the RBA’s view on interest rates, where the decline to date in the exchange rate has only returned it to levels prevailing in early June," ANZ commented in a report.

The Reserve Bank has briefed both the Government and Opposition on the global and local implications of a British exit from the European Union. Speaking in Sydney last night, Reserve Bank assistant governor Guy Debelle warned of a liquidity squeeze if there is a decision for Britain to break away from the EU.

Meanwhile, there are growing concerns that the Brexit debate in Britain has fuelled a mood of protectionism and isolationism in other fragile members of the EU. John Denton, co-chair of the International Chamber of Commerce and head of the Australian law firm Corrs Chambers Westgath said that Australia would not be a net beneficiary of the UK exiting Europe. It would actually have negative consequences for Australia. It's not assured it would be in the country’s national interest.