Major bank predicts further RBA rate cuts

by Robin Christie16 May 2013

The RBA is likely to make at least one more rate cut this year, suggests NAB chief economist of markets, Rob Henderson.

Speaking at a post-budget briefing, Henderson noted that the RBA is on the record as saying that the best way to deal with an asset class bubble is ‘just don’t have one’ suggesting that back-to-back cuts may not be on the cards.

“To me that means we’re not going to get rapid-fire rate cuts in the early days. We still think we need one more and maybe one more after that. But certainly we think there’ll be room for one more down the track. The exact timing of that will depend on the data. If we get a very bad run of data into the June board meeting, I wouldn’t rule it out,” he said.

“The housing market’s ok, the economy’s still weak, the inflation outlook is still improving; there’s one more cut out there somewhere.”

NAB is forecasting a 0.25% cut to take place in the final quarter of the year, but Henderson stressed that the timing of any cut will depend on the data.

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