RBA rate decision - where to from here?

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Westpac Chief Economist, Bill Evans, missed the mark this time around; “The Reserve Bank Board meets next Tuesday to decide whether to cut rates. Markets and media are strongly favouring a rate cut. We are sticking with our view that the Board will decide to hold rates steady.” While the NAB Economics team suggested it was close to even odds, with a 55% chance of a cut.

We spoke with Charlie Jamieson from Jamieson Coote Bonds a couple of weeks ago, who pointed out that inflation (not released at the time) was the critical data point. More interestingly, in his view, we’re in for another cut; “we think if they have to move it will be at least 50 basis points - they don’t have a history of tweaking. That probably wouldn’t be delivered in one hit; it’s probably delivered in 2 x 25.” 

Altair Asset Management doesn’t expect much impact from the rate cuts, but there is at least one positive; “at least it could go some way to arresting the fading strength in household spending.”


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