From an RBC Capital note on August 18:
RBC Capital economists forecasting 50bps of cuts still to come
- Says currently the RBA is neutral
- Say RBA positive commentary on the domestic economy & also on EM Asia
- Say economic developments will need to worsen to justify a rate cut in Q4
- "This is a shift in the onus of proof- whereas sub-3% growth was enough to leave the RBA thinking the output gap is growing, they now seem to think this is somewhere near potential, so a shift to an even lower rate of growth will be needed to nudge the unemployment rate up and inflation forecasts down. Given that we continue to see material risks of this occurring, we keep our cash rate profile unchanged at a further 50bps of easing for now"
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I agree the RBA is neutral at present .. and yeah, there will be no further cut unless economic developments go downhill from here.
