Australia: Disappointing 3Q19 GDP – ING

Robert Carnell, chief economist at ING, suggests that mildly disappointing Australian GDP figures for 3Q19 GDP has made a further rate cut in February next year to look a more solid call.

Key Quotes

“The Reserve Bank of Australia has been characterising the economy as experiencing a "gentle upturn". But this data seems to suggest more of a gentle downswing. Consequently, it will be very hard for RBA Governor Lowe to hold back from easing again in February 2020, as he did this week.”

“About the only thing now that could unseat views of more easing, would be a clear turnaround in the labour data. If instead this remains soft, then a February rate cut will look all but a done deal.”

“We imagine that if the data is looking sufficiently soft to merit a further rate cut, then in all likelihood, it will end up requiring two, so as long as the forthcoming labour data don't change the picture, then we will be looking to reduce our rate outlook to 0.25% by the end of 2Q20, and most likely scaling back our AUD forecasts too.”