S&P: RBA will be forced to cut rates further
|Ratings agency Standard & Poor's (S&P) thinks the Reserve Bank of India (RBA) will be forced to cut interest rates, as coronavirus outbreak will deliver a material knock to Australia's growth.
Key points
Gross Domestic Product (GDP) could be as low as 1.7% – down significantly from the previous forecast of 2.2%.
Tourism and education sectors are likely to take hit due to virus outbreak. Many Chinese students may not be able to start the new academic year.
Commodity prices could feel the pull of gravity.
On the bright side, weaker AUD would act as cushion.
The RBA kept interest rates unchanged at a record low of 0.75% earlier this month and said it may refrain from cutting rates for some time, disppointing traders expecting a dovish stance in the wake of the virus outbreak.
However, the minutes released Tuesday flagged concerns about the coronavirus outbreak and noted there was a case a for further cuts lower rates could speed progress toward bank's inflation and employment goals.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.