Westpac's chief economist Bill Evans is pretty bluint with what he expects from the Reserve Bank of Australia on Tuesday:
- There is little chance that the Board will decide to change rates
And, looking ahead (bolding mine):
- Markets are giving a less than 10% probability to a move in October rising to a 25% probability by November and 50% by December
- That pricing compares with market pricing, back in late August, of a 100% probability of a December move. The 100% probability has now been pushed back to February next year with a 40% probability of a second cut by June
- Those daunting probabilities contrast with our current view that rates will remain on hold over the course of 2016.
Evans continues (this is in brief):
- The view that rates will remain on hold is heavily dependent on some stability in the global growth outlook
- We are predicting a more stable global environment in 2016 ... some of the gloom around China lifting, particularly as the authorities continue to roll out stimulus
- These are particularly uncertain times. If we were to significantly change our global view we would certainly be more comfortable with the market's expectation of 1.5-2 rate cuts next year in the six months to June
