RBA Preview: 4 Major Banks expectations from February meeting

Tomorrow, we have an all-important RBA meeting for February, and as we get close to the decision timings, here are the expectations as forecasted by the economists and researchers of 4 major banks regarding the upcoming meet.

Most of the researchers and economists are forecasting, that the RBA will likely keep rates unchanged, but will slash its GDP growth forecasts for the Australian economy.

TD Securities

“The tone of the RBA's Feb statement is likely to be less upbeat than the Dec statement. However the statement is likely to disappoint the doves.”

“We anticipate the Bank is likely to reaffirm growth to track above trend (2.75%) and for inflation to return to target, but for progress to be 'gradual'.”

“The RBA commentary is likely to flag downgrades to GDP forecasts but for CPI forecasts to remain unchanged. Risk is for inflation to take longer to return to target.”

“If the Bank removes 'gradual' from the statement, this would allude to deeper cuts to GDP forecasts and the inflation profile.”

Westpac

“We expect the RBA to leave rates unchanged in 2019 and in 2020.”

“While markets widely expect no move at the February meeting, the first for the year, there is speculation as to whether the Bank will soften their stance.”

“We expect the RBA to remain positive on the outlook, albeit marking down their growth forecasts somewhat.”

“The Bank will anticipate that further progress on inflation and unemployment will be (very) gradual – suggesting steady rates for some time yet.”

Societe Generale

In the view of the analysts at Societe Generale, the Reserve Bank of Australia (RBA) is more likely to cut its benchmark interest rate going forward, in the face of dwindling US and global growth prospects.

“Since the RBA's previous meeting in December, prospects for the global economy have deteriorated markedly.”

“Australia's economy looks notably less strong than it did.”

“We have ditched the view that rate normalisation would begin in May of this year.”

“Indeed, with the US economy likely to slide into recession in 2020, we believe the next RBA rate move is more likely to be a cut than a hike.”  

Capital Economics

“The RBA will probably reduce its GDP growth forecasts. But should still signal that the next move in rates will be up.”

“Our more pessimistic outlook for economic activity, the labour market and inflation suggest that the Bank may instead have to cut interest rates before long.”

“We believe that the Bank continues to underestimate the threat from the weaker housing market.”

“We now expect the Bank to lower interest rates to 1.25% by the end of the year and follow up with an additional 25bp cut in the first half of next year.”