RBA to cut the cash rate to 0.75% by November - Westpac


Bill Evans, chief economist at Westpac, points out that Westpac is now forecasting three cuts in 2019 in June; August and November to push the cash rate from 1.5% to 0.75% and to hold at that level through 2020.

Key Quotes

“Our forecasts for employment; wages growth; economic growth ; inflation and conditions in the housing market  are consistent with the need for  policy to ease  through the full course of 2019, not to go on hold as early as August.”

“We see the unemployment rate drifting up to 5.4% by year’s end; economic growth at 2.2% for 2019; underlying inflation at 1.4%; and the housing market still weak although approaching stability.”

“That means that the June and August cuts should be supported by a further cut in November.”

“Looking into 2020 we expect that the case for policy easing could still be apparent but as rates go lower and time passes the option to use QE will become more attractive. Arguably the RBA may see our current forecast of 0.75% as the base or possibly as low as 0.5%. Beyond 0.5% QE seems to be the more effective policy if further easing was required.”

“Consequently our central forecast for the terminal cash rate in this cycle is 0.75% with risks to the downside, although we would certainly see 0.5% as the floor for the cash rate, with QE a more effective policy tool thereafter.”

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD under pressure near 1.1380 ahead of Powell

EUR/USD sees fresh selling and tests daily lows near 1.1380 region amid a broad-based US dollar comeback, as all eyes remain on the Fed Chair Powell's speech for fresh insights on the US interest rates outlook. 

EUR/USD News

GBP/USD keeps gains near 1.2760 post-UK data

The GBP/USD pair keeps the bid tone intact near the 1.2760 region despite a sharp drop in the UK CBI Retailing Reported Sales and broad US dollar recovery. Eyes on Powell's speech. 

GBP/USD News

USD/JPY: recovers to 107 area as markets wait for Powell's speech

10-year US T-bond yield extends slide, drops below 2%. US Dollar Index stays calm near the 96 mark. Fed's Williams & Bostic, FOMC Chairman Powell are scheduled to speak later today.

USD/JPY News

Gold consolidates recent upsurge to multi-year tops, comfortable above $1400 mark

Gold adds to the post-FOMC upsurge amid escalating geopolitical tensions. A modest USD uptick/stability in equity markets prompts some profit-taking. The downside remains limited ahead of Powell’s speech later this Tuesday.

Gold News

US Conference Board Consumer Confidence Preview: Employment sustains optimism

Income gains, employment and general economic prosperity support confidence. Decline in Q2 GDP not impacting sentiment. Low inflation and faling interest rates are positive consumer trends.

Read more

Majors

Cryptocurrencies

Signatures