Bill Evans, analyst at Westpac, points out that as per expectations, the RBA lowered the cash rate to 0.75% and the Governor has not ruled out further moves with Westpac’s retaining their call that February seems most likely.
Key Quotes
“As expected the RBA Board lowered the cash rate by 25 basis points at its October meeting to 0.75%.”
“The Governor’s Statement certainly opens the door to even lower rates although a follow up move in November seems unlikely.”
“On July 24 Westpac added a further rate cut to 0.5% by February to its rate profile. Today’s decision and the associated Statement make a clear case that the cycle is not over yet.”
“For that reason we are encouraged to expect another cut. It seems highly unlikely that the Bank would opt for back to back cuts as we saw in June/ July to signal the beginning of the cycle.”
“One of the key reasons why we favoured October against the Consensus view of November was that October provided the flexibility to move in December should global conditions deteriorate sharply. That is not our forecast so we remain comfortable with a February move for the next and last stage of this interest rate cycle.”
“Factors that will be important going forward will be the impact of this decision on private sector rates and the RBA’s confidence around unconventional policies.”
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