Westpac expect the Reserve Bank of Australia to cut the cash rate yet again at the first meeting of 2020.
This is not a new update from WPAC, but they have again reiterated the call in their their response to the falling consumer confidence data released earlier:
- Australia Westpac Consumer Confidence Index for December: -1.9% m/m (prior +4.5%)
- More on plummeting Australian consumer confidence
Via Westpac on the RBA, in brief:
- to cut the cash rate by 0.25% to 0.5%
- the Board will still be impressed by the other channels through which monetary policy has been working - boosting asset prices and maintaining downward pressure on the exchange rate.
- The Governor has also noted that while consumers may not be spending the benefits of lower rates directly they are repairing their balance sheets with a view to spending at a later date.
- In his recent statement following the Board meeting in November the Governor also linked the boost in asset prices to spending through a potential wealth effect and the lift in housing turnover and associated spending on household goods.
- The decision to cut the cash rate in February is also expected to be supported by a downgrade in the growth forecasts for 2020.
