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Bill Evans, Research Analyst at Westpac, suggests that they expect the RBA cash rate to remain on hold through 2020.

Key Quotes

“The tightening of financial conditions which is normally associated with increases in the RBA cash rate has been replaced, in this cycle, with macro prudential policies and rising wholesale interest rates. Accordingly Australia’s participation in the global tightening cycle has taken a different form.”

“Markets have now partly moved into line with our view with only around a 50% probability of one rate hike by the end of 2019. Furthermore, 65% of forecasters in the Bloomberg survey are still expecting the cycle to begin by the third quarter of 2019.”

“Our view is that the cash rate is likely to remain on hold not only through 2018 and 2019 but also 2020.”

“Some may argue that we are unrealistically forecasting that Australia will completely miss the global rate hike cycle if rates remain on hold for such an extended period.”

“We differ from that view arguing that financial conditions are affected by more forces than just the RBA cash rate.”