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RBA could cut again

Lachlan Maddock
— 1 minute read

The RBA looks set to slash rates again following the release of its December minutes.

While the RBA board noted that the economy appeared to have reached a “gentle turning point” (we’ve heard that one before) and kept rates steady in December, they agreed that it would be important to reassess the economic outlook in February. 

“Economic growth and the unemployment rate remained broadly consistent with the forecasts, but members agreed that it would be concerning if there were a deterioration in the outlook,” the minutes read. 

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That was prior to the release of a dud mid-year budget that showed poor GDP and wage growth, and which gave Governor Philip Lowe no fiscal policy Christmas presents. 

The next cut will bring rates to 0.50 per cent – a single cut from 0.25 per cent, the point at which Governor Lowe indicated the RBA would move to quantitative easing. 

The RBA had previously noted that their successive cuts – meant to bolster the economy – were having a grievous impact on consumer confidence, with people holding onto their money for fear the situation might get worse. 

But the RBA has put aside its concerns from November’s meeting in the hallowed halls of 65 Martin Place.

“While members recognised the negative confidence effects for some parts of the community arising from lower interest rates, they judged that the impact of these effects was unlikely to outweigh the stimulus to the economy from lower interest rates,” the minutes read. 

Looks like it’s full steam ahead on the cuts.

 

RBA could cut again
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