A piece from Australian journalist Peter Martin in The Sydney Morning Herald/The Age (Aussie press)
Martin is a stand-out ... he tipped both RBA cuts this year (and didn't tip on the months they stood pat). When I say 'tipped' ... well, he was more foreceful than that ... it was almost as if he had 'insider' info. (Not that that would happen ;-) )
So ... worth paying attention to.
Don't expect another cut in interest rates. It's true that Reserve Bank governor Glenn Stevens is holding open the possibility of further cuts. It remains, he said last week, "on the table". But further cuts are far less likely than they would have been, for three reasons
- The Australian dollar is about where the bank wants it
- Fears there will come a point when further cuts encourage dangerously reckless borrowing
- Another reason - the most important - is that the RBA is in the process of lowering its ambition... It is preparing to accept a more modest rate of economic growth than it was only months ago.
On point 3 ...
RBA Governor Stevens said:
the actual trend is "lower than the 3 per cent or 3.25 per cent we have assumed for many years".
If so, says Martin, the Reserve Bank would have no reason to cut rates from here on, even if it was to forecast growth never reaching 3 or 3.25 per cent
