RBA 'dashed' hopes for rate cut: Westpac
By
Adam Smith
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27/09/2011 5:00:00 AM
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While global and domestic data highlight the need for a rate cut, the RBA does not seem swayed, Westpac has said.
Following a speech last week by RBA Deputy Governor Ric Battelino, Westpac chief economist Bill Evans has said hopes for a rate cut may have been "dashed"/
"The developments in the domestic data and global financial markets continue to make the case for a rate cut. Unfortunately for our call, at this stage, the decision maker does not share our opinions," he said.
Evans referred to statements from Battelino indicating market pricing had been too quick to predict RBA rate cuts. Batellino used as an example market predictions of a rate cut following the failures of Enron and Worldcom in 1998, saying the cut did not eventuate. However, Evans argued that current conditions were more dire.
"With credit growth running at around 14% pa and housing credit growing by around 20% the case for domestic action was not as strong as the present where credit growth has been a feeble 3%pa," he remarked.
Evans also contended that the Chinese economy would slow more markedly than predicted by the RBA, and said recession in Europe and the United States would have a greater impact on the Australian and Asian economies than the RBA had forecast.
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