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David Plank, analyst at ANZ, suggests that they are expecting the RBA to stay on hold in 2019 and 2020 even as slower H2 2018 data prompted markets to start pricing in an RBA rate cut over the coming year, with recent weakness in business conditions and consumer confidence and a shift in the RBA’s language adding impetus to that shift.

Key Quotes

“Periods of low GDP growth have not always translated into higher unemployment and RBA easing. The Bank is more focused on trends in the unemployment rate and surprises on inflation than on GDP growth, as rate cut triggers.”

“As with the RBA’s latest forecast, our ANZ Labour Market Indicator (LMI) points to stability in unemployment over the next six months or so.”

“With interest rates at record lows, fiscal policy is the better tool for stimulating the economy. And we expect the April Budget to be stimulatory.”