One major bank has poured cold water on the idea of a further RBA
Commonwealth Bank economist Michael Blythe has forecast the cash rate to remain on hold for the entire year, Fairfax has reported. While CBA
previously predicted a 2015 rate hike, Blythe said the bank has now pushed this projection back.
“It’s now quite likely that the RBA
continues to sit on the sidelines through 2015,” he said. “We now see an initial rate rise in the first quarter of 2016.”
Projections that the Reserve Bank would further cut the cash rate thi year “rested on weak foundations”, Blythe claimed.
Blythe said sluggish GDP growth “looks odd relative to other indicators showing a stronger picture”.
“We still expect a fairly modest and drawn-out approach that returns the cash rate to a neutral level of 3.5%,” he said.