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15 Apr 2015
RBA might cut rates in May - Westpac
FXStreet (Barcelona) - Bill Evans, Chief Economist at Westpac, believes that soft commodities and data signals that RBA might cut rates by 25bps in May.
Key Quotes
“The Reserve Bank Board next meets on May 5, one week before the announcement of the Commonwealth Budget. On December 4 last year we forecast that the Bank would cut rates twice in two 25bp tranches beginning in February 2015. We expected, at the time, that because it was clear that a total of at least 50bps would be needed, the second move would come in March.”
“Delaying the decision until May is consistent with a cautious approach near the end of a long easing cycle. The unexpected 21% fall in the iron ore price with its associated implications for the terms of trade and nominal income growth strengthens the case for more rate relief.”
“Today’s drop in Consumer Sentiment, well into the range where pessimists outnumber optimists, also supports the case for a further cut.”
“We are extremely confident that the Bank will finally deliver the much anticipated second cut of 25bps on May 5.”
Key Quotes
“The Reserve Bank Board next meets on May 5, one week before the announcement of the Commonwealth Budget. On December 4 last year we forecast that the Bank would cut rates twice in two 25bp tranches beginning in February 2015. We expected, at the time, that because it was clear that a total of at least 50bps would be needed, the second move would come in March.”
“Delaying the decision until May is consistent with a cautious approach near the end of a long easing cycle. The unexpected 21% fall in the iron ore price with its associated implications for the terms of trade and nominal income growth strengthens the case for more rate relief.”
“Today’s drop in Consumer Sentiment, well into the range where pessimists outnumber optimists, also supports the case for a further cut.”
“We are extremely confident that the Bank will finally deliver the much anticipated second cut of 25bps on May 5.”