Just about everyone is starting to call for the Australian central bank to cut rates this year following the Q4 GDP report
- Forecast of a 50 bps rate cut before the year is out
- Picking the timing of rate cuts is a little tricky
- May or August is the best bet for initial easing
- May cut may be too soon since it would be prior to the federal election
- Though not sure if that would be a relevant issue for the RBA
Economists, Ric Deverell and Justin Fabo, comments on their change of forecast. They note that the RBA has little to lose from cutting rates again saying that "we cannot see what the downside risks are to easing policy further". Adding that "additional policy support should be provided if growth actually turns down sharply".
They even bring out the possibility of QE if the Australian economy does experience a sharper downturn, arguing that the country still retains ample fiscal ammunition to respond to such an event alongside unconventional policy tools. More on that here.
Macquarie now joins in with a host of other houses calling for a rate cut, which includes Westpac, JP Morgan, UBS, Nomura, AMP, Capital Economics and Market Economics. Some headlines on the matter from the past few weeks and today:
- Westpac update their RBA forecast - expect a cash rate cut
- Nomura now sees the RBA cutting its cash rate by 50 bps this year
- AMP again looking for 2 RBA rate cuts in 2019
- View on what the Australian GDP means for the RBA. Rate cuts in August and November.
- The calls for RBA rate cuts are getting sooner - here's the latest
