28 Jun 2013
Flash: Expect another RBA rate cut - Nomura
Fxstreet.com (Barcelona) - Nomura economists Charles St-Arnaud and Martin Whetton note that the RBA will hold rates at its next monetary policy meeting on 2 July.
They add that at its last board meeting in June, the RBA left rates unchanged at 2.75% and stated that "that the stance of monetary policy remained appropriate for the time being". Since then they see that data has been mainly on the weak side and they expect the RBA to cut its policy rate by 25bps to 2.5% and retain its easing bias. They also expect the RBA to cut again later this year (likely October or November), as they anticipate continued signs of weakness in the domestic economy.
They add that some have argued that the recent political uncertainty and the upcoming elections increase the likelihood that the RBA will not act on monetary policy until later this year. They write, “While an argument can be made that the central bank does not want to have an effect on political outcomes, we believe the RBA understands the need to provide some extra stimulus now, and would rather act than wait three months before providing stimulus to the economy.”
They add that at its last board meeting in June, the RBA left rates unchanged at 2.75% and stated that "that the stance of monetary policy remained appropriate for the time being". Since then they see that data has been mainly on the weak side and they expect the RBA to cut its policy rate by 25bps to 2.5% and retain its easing bias. They also expect the RBA to cut again later this year (likely October or November), as they anticipate continued signs of weakness in the domestic economy.
They add that some have argued that the recent political uncertainty and the upcoming elections increase the likelihood that the RBA will not act on monetary policy until later this year. They write, “While an argument can be made that the central bank does not want to have an effect on political outcomes, we believe the RBA understands the need to provide some extra stimulus now, and would rather act than wait three months before providing stimulus to the economy.”