jeudi 2 avril 2015
RBA to Steal Limelight as Rate-Cut Hype Builds
Posted on 09:22 by nice news
Most economists say that a rate cut from the Reserve Bank of Australia (RBA) in either April or May is inevitable, however there is a growing bias towards cutting sooner rather than later in order for the central bank to get more bang for its buck.
Markets are currently pricing in a 75% chance of a rate cut on April 7 when the RBA delivers its cash-rate statement, BNZ currency strategist Kimberly Martin said in a note on Thursday.
At the RBA's March meeting - when the cash rate was held at 2.25% - Governor Glenn Stevens explicitly stated that further easing may be appropriate in order to foster sustainable growth in demand and inflation consistent with the bank's target.
Since then there has been widespread acceptance that a rate cut is not a matter of if, but when.
The outlook for both demand and inflation in Australia are bleak, with the full impact of the mining-investment downturn yet to be seen, and the sharp drop in global oil prices since last year still weighing on consumer-price inflation.
Furthermore, the impact on the labor market is forecast to worsen, only adding to reasons why the RBA is likely to show extra caution and act early.
Paul Dales of Capital Economics said in a note on Monday that they favor an April rate cut, and predict that the cash rate will be slashed to 1.50% by year end.
"...given that the RBA appears to have decided that there is a clear case for cutting rates further, we see little point in delaying until May," Dales wrote. "Cutting rates sooner rather than later always provides a bigger bang for your buck."
Westpac also have a slight bias for a rate cut in April instead of May, according to Westpac chief economist Bill Evans.
"We are sticking with that April view while recognising that the Bank could easily defer the rate cut decision until May," he said
Markets are currently pricing in a 75% chance of a rate cut on April 7 when the RBA delivers its cash-rate statement, BNZ currency strategist Kimberly Martin said in a note on Thursday.
At the RBA's March meeting - when the cash rate was held at 2.25% - Governor Glenn Stevens explicitly stated that further easing may be appropriate in order to foster sustainable growth in demand and inflation consistent with the bank's target.
Since then there has been widespread acceptance that a rate cut is not a matter of if, but when.
The outlook for both demand and inflation in Australia are bleak, with the full impact of the mining-investment downturn yet to be seen, and the sharp drop in global oil prices since last year still weighing on consumer-price inflation.
Furthermore, the impact on the labor market is forecast to worsen, only adding to reasons why the RBA is likely to show extra caution and act early.
Paul Dales of Capital Economics said in a note on Monday that they favor an April rate cut, and predict that the cash rate will be slashed to 1.50% by year end.
"...given that the RBA appears to have decided that there is a clear case for cutting rates further, we see little point in delaying until May," Dales wrote. "Cutting rates sooner rather than later always provides a bigger bang for your buck."
Westpac also have a slight bias for a rate cut in April instead of May, according to Westpac chief economist Bill Evans.
"We are sticking with that April view while recognising that the Bank could easily defer the rate cut decision until May," he said
RBA to Steal Limelight as Rate-Cut Hype Builds
Categories: RBA to Steal Limelight as Rate-Cut Hype Builds
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