Economists Expects Rate Cuts on the Way
It is being predicted by the major economists that, seeing the instability in global economic conditions, RBA will have cut rates this year.
According to Dr Shane Oliver, the chief economist at AMP Capital, “The latest bout of global growth worries warns that the global environment Australia faces remains messy. So while rebalancing away from mining will continue to help we may face another year with growth stuck around 2.5 per cent”.
He further added, “Ongoing commodity price weakness means ongoing pressure on the budget deficit, points to more downwards pressure on the $A and more pressure on the RBA to cut interest rates again. Expect the $A to fall to around $US0.60 by year end and the RBA to cut the cash rate to 1.75 per cent”.
According to him, the global economic conditions are being influenced by Chinese economy and rising US dollar. Also in the starting of this New Year, shares market is also suffering. Along with it, commodity prices as well as oil prices have also faced a downfall.
So analysing the above conditions, the economists are expecting that, RBA will drop rates to .25 points in the coming meeting. But, what actually will happen can only be seen after the board’s meeting that will be held in February.