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RBA in a hurry to get the cash rate lower - ANZ

2019-06-21 12:50

In view of analysts at ANZ, the RBA seems to be in a hurry to get the cash rate lower and following this week’s RBA Minutes and a speech by Governor Lowe, ANZ have brought forward the expected rate cuts to July and August.

Key Quotes

“After August, we think the RBA will pause for a period. It is our expectation that the combination of lower interest rates, a much flatter yield curve (driven in part by the forward guidance the RBA is already effectively providing), and a lower AUD and tax cuts will provide the boost the economy needs to get back onto a growth path that will push the unemployment rate lower over 2020.”

“But more stimulus may eventually be required. In particular, we are concerned that the global evolution of monetary policy may mean the AUD struggles to move lower. In which case the RBA may be forced to lower the cash rate below the 0.50–0.75% level that most analysts have assumed is the likely bottom, including ourselves.”

“Lowe said this week that he hopes the RBA will not have to take the cash rate as low as some European central banks have. This leaves a lot of room for further rate cuts.”

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