Bill Evans, chief economist at Westpac, points out that the RBA has cut the cash rate to 1% and signalled that they will continue to adjust monetary policy if needed.
Key Quotes
“It seems likely that the RBA growth and inflation forecasts for 2020 that will be released in the August Statement on Monetary Policy, which will follow the August Board meeting, will be unchanged from the May forecasts of 2.75% for GDP growth and 2% for underlying inflation. This further emphasises the importance of the labour market in driving the policy response in June and July.”
“The critical final paragraph in the Governor’s Decision Statement leaves open the possibility of further stimulus.”
“If the RBA were to lower the cash rate to 0.5% and still be dissatisfied with the excess spare capacity in the labour market then we expect that they will consider putting pressure on governments to loosen fiscal policy, as well as exploring other alternative policies that the RBA itself can embrace.”
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