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Money Matters: May Edition

For those that sneezed and missed the outcomes of the federal budget a fortnight ago, be sure to get the high level overview. In other monthly news updates; The beginning of the month started out as expected with the RBA holding the cash rate steady at 2.5%. There was no change to the RBA’s position rather signals that there is likely to be “a period of stability in interest rates”. The RBA is mindful though, and keeping a close eye on construction demand for housing and the transition of growth sources from mining to non-mining. Since the release of the budget there was some slight changes to forecasted numbers including GDP (Growth) up by +0.25% to 3% and CPI (Inflation) down  -0.25% to 3%. However there is a view that it seems like a play of numbers from one side of the equation to the other, largely due to the stronger Australian Dollar. The job rate remained steady at 5.8% from the previous month and seems that many were waiting on the 2014 federal budget outcomes to determine the impacts on employment. On the horizon there is some positive news for lowering unemployment from the recent budget and in particular for over 50’s with the government incentivising corporates and business’ with cash rebates for hiring mature aged workers and also the governments proposed changes to ‘unemployment benefits’ by tightening access for the first 6 months to limit the amount of benefits paid to Australian’s who are not actively seeking employment.     In overseas news the majority of the ‘impact’ markets US, UK, Europe and China all recorded mainly unchanged positions for forecasted numbers for the coming months with only slight adjustments where relevant. Markets generally gained minimal positive positions except for Japan where there was a double-digit drop in retail sales due to the sales tax hike in April. Caution: With monetary policy generally remaining steady and markets gaining a slight positive position, it may be time to review your investment portfolio (this includes your superannuation) for local and foreign exposure. Tip: With the 2014 financial year nearing closer to 30th June its time to review your deductible expenditure and determine if there is any room to maximize deductions through either contributions to super, pre-payment of deductible interest or work / business expenses. Executed correctly, the tax savings could be well worth the pre-planning effort.