The outcome of the meeting did not come as a surprise, with the ASX 30-Day Interbank Cash Rate Futures derivative trading at 98.015 earlier today – indicating a 6 per cent expectation of a cut to 1.75 per cent.
The market’s 96 per cent expectation of the RBA staying its hand in March was widely reflected by the opinions of economists surveyed by finder.com.
CBA chief economist Michael Blythe said there is “no need” for more stimulus at this point in the economic cycle.
“The economy is responding to low rates and a lower Australian dollar,” Mr Blythe said.
AMP Capital’s head of investment strategy and chief economist Shane Oliver said the RBA is in “wait and see” mode regarding the job market and the potential impact of “global financial turmoil”.
“Recent Reserve Bank commentary suggests a degree of comfort with the current level for the cash rate and while it retains an easing bias, not enough has changed to suggest it is about to act on it,” Mr Oliver said.
The ANU Centre for Applied Macroeconomic Analysis Shadow Board attributed a 68 per cent confidence for the cash rate staying at 2 per cent.
“The confidence that a rate cut is appropriate has, after two consecutive drops, risen again and now equals 22 per cent (17 per cent in February); the confidence that a rate increase, to 2.25 per cent or higher, is necessary has fallen to 10 per cent (14 per cent in February),” it said.
