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15 Apr 2015
RBA: Another rate cut expected, likely in May - NAB
FXStreet (Bali) - Alan Oster, Group Chief Economist at NAB, expects another rate cut by the RBA, noting that May is the most probable month, although it could be delayed if the economy improves.
Key Quotes
"We have fine tuned but not fundamentally changed our forecasts– 2014/15 2.3% and 3.0% in 2015/16. The non mining sector is still struggling to offset the impact on domestic demand of sharply lower mining investment.
"Further falls in commodity prices are lowering income flows. A particular concern is the weak medium term outlook for non mining investment, while the consumer remains cautious. As a result we still see unemployment rising to 6.7% by end 2015."
"Another rate cut is expected – most likely May but could be delayed if the economy improves (tentative signs of this in the March NAB Business Survey). We see the probability of a cut to below 2% being around 35-40% - well below market expectation (fully priced). Rate rises to start in late 2016."
Key Quotes
"We have fine tuned but not fundamentally changed our forecasts– 2014/15 2.3% and 3.0% in 2015/16. The non mining sector is still struggling to offset the impact on domestic demand of sharply lower mining investment.
"Further falls in commodity prices are lowering income flows. A particular concern is the weak medium term outlook for non mining investment, while the consumer remains cautious. As a result we still see unemployment rising to 6.7% by end 2015."
"Another rate cut is expected – most likely May but could be delayed if the economy improves (tentative signs of this in the March NAB Business Survey). We see the probability of a cut to below 2% being around 35-40% - well below market expectation (fully priced). Rate rises to start in late 2016."