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| Reserve Bank of Australia will cut rates three times this year, economist says | Reserve Bank of Australia will cut rates three times this year, economist says |
| (32 minutes later) | |
| A weakening economy will force the Reserve Bank of Australia to cut interest rates three times this year to the uncharted territory of 0.75%, according to a leading economist. | A weakening economy will force the Reserve Bank of Australia to cut interest rates three times this year to the uncharted territory of 0.75%, according to a leading economist. |
| Westpac’s widely respected senior economist, Bill Evans, said on Friday he now believed the central bank – faced with anaemic GDP growth, falling house prices and rising unemployment – would go further than previously expected as it cut rates from the long-standing record low of 1.5%. | Westpac’s widely respected senior economist, Bill Evans, said on Friday he now believed the central bank – faced with anaemic GDP growth, falling house prices and rising unemployment – would go further than previously expected as it cut rates from the long-standing record low of 1.5%. |
| It’s absurd to suggest that rate cuts are good news for the government | Greg Jericho | It’s absurd to suggest that rate cuts are good news for the government | Greg Jericho |
| Evans believes the RBA will announce a cut of 0.25 percentage points at its next meeting on 4 June, followed by another similar one in August and then another in November. | |
| His prediction was followed by a 0.3% fall in the Australian dollar, which was at US$68.88 at lunchtime on Friday. The ASX200 was down 0.6%. | His prediction was followed by a 0.3% fall in the Australian dollar, which was at US$68.88 at lunchtime on Friday. The ASX200 was down 0.6%. |
| Westpac's June, August, November #RBA rate cut call is spot on. His Holiness Bill Evans leading the way. Take note #ausbiz #ausecon | |
| A rate cut in June now appears to be a near-certainty with Bloomberg’s survey of economists unanimous in believing the RBA will act. | A rate cut in June now appears to be a near-certainty with Bloomberg’s survey of economists unanimous in believing the RBA will act. |
| Although Evans sees the cash rate staying at 0.75% throughout 2020, he did not rule out a further cut to take base borrowing costs to 0.5%. | Although Evans sees the cash rate staying at 0.75% throughout 2020, he did not rule out a further cut to take base borrowing costs to 0.5%. |
| According to @BloombergAU survey it's unanimous the #RBA will ease policy at its June meeting with August favoured for the follow up cut, @WestpacMacro the only shop calling the cash rate below 1%, some sympathy for the view as I don't believe 50bp will be enough #ausbiz pic.twitter.com/GKLfhEPO34 | According to @BloombergAU survey it's unanimous the #RBA will ease policy at its June meeting with August favoured for the follow up cut, @WestpacMacro the only shop calling the cash rate below 1%, some sympathy for the view as I don't believe 50bp will be enough #ausbiz pic.twitter.com/GKLfhEPO34 |
| He even suggested that the RBA might need to embark on a program of quantitative easing, or asset purchases, such as the schemes adopted in the US, UK, Europe and Japan after the global financial crisis. | He even suggested that the RBA might need to embark on a program of quantitative easing, or asset purchases, such as the schemes adopted in the US, UK, Europe and Japan after the global financial crisis. |
| “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,” he said. | “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,” he said. |
| Housing market may bottom out over next year, Australian property experts say | Housing market may bottom out over next year, Australian property experts say |
| “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. | “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. |
| “Our central forecast for the terminal cash rate in this cycle is 0.75% with risks to the downside. | “Our central forecast for the terminal cash rate in this cycle is 0.75% with risks to the downside. |
| “We would certainly see 0.5% as the floor for the cash rate, with QE [quantitative easing] a more effective policy tool thereafter.” | “We would certainly see 0.5% as the floor for the cash rate, with QE [quantitative easing] a more effective policy tool thereafter.” |
| For the rate to stay at 0.75%, Evans said the housing market would have to stabilise and there would need to be a sustained confidence boost from a stable federal government in a position to embrace genuine reform. | For the rate to stay at 0.75%, Evans said the housing market would have to stabilise and there would need to be a sustained confidence boost from a stable federal government in a position to embrace genuine reform. |
| He said the terms of trade would also have to hold up much better than assumed in budget estimates, and that global trade tensions would have to ease. | He said the terms of trade would also have to hold up much better than assumed in budget estimates, and that global trade tensions would have to ease. |
| Interest rates | Interest rates |
| Banking | Banking |
| Reserve Bank of Australia | Reserve Bank of Australia |
| Business (Australia) | Business (Australia) |
| Housing | Housing |
| Australian economy | Australian economy |
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