The firm thinks that central banks have shifted from being more dogmatic to more pragmatic as we begin the new year

  • Thinks RBA will holds rates at 1.50% 'for the foreseeable future'
  • Adopting a more dovish stance does not mean a rate cut is imminent
  • Thinks that is probably 'a bridge too far' for the RBA
  • AUD looks and feels 'cheap'
  • There is a widespread view that USD will fall and currencies like AUD will go up

The view is from the firm's asset management arm and comes from global head of fixed income, Bob Michele. He also explains that for the RBA to considering cutting rates, there would likely need to be a continued slowdown in the economy, further deterioration in property prices, a lack of domestic options to stimulate growth and an extended period of weakness in the global economy.

And Michele argues that the RBA and the conditions are not quite there yet. He also noted some things about the dollar and said that the greenback could surprise investors this year:

"I think that's going to be one of the surprises this year. That the dollar doesn't come off all that much. It pretty much stays where it is then appreciates towards the end of the year.In the US, things look pretty good. The consumer does look pretty strong and it's difficult to see an industry or a sector that looks problematic."