Goldman Sachs head of economics, commodities and strategy for Australia, Tim Toohey, in the Sydney Morning Herald today says that there is worse ahead for Australia, and that the only thing holding the Reserve Bank of Australia (RBA) back from adopting an easing bias is the property boom:
- Says mining investment is set to drop further
- Price of raw material exports set to fall further
- Government revenue to fall also
- “It’s going to come down to the unemployment rate, inflation and, as I say, house prices are more of a second-order concern,” he said. “Into that March, April period next year, that’s when it’s going to get interesting.”
On the AUD … Toohey says:
- “The currency has to be lower, but it’s lower relative to where commodity prices actually are going”
- “It’s going to feel like a very, very long time, I think, before that shift in Fed policy can actually give you a breakage in the currency without potentially additional policy easing on the local front”
