A leading economist is predicting two further cuts to the official cash rate before year’s end.
Bill Evans, Westpac’s chief economist, made the call at the Australian Property Institute’s annual Economic Indicators lunch in Brisbane – admitting there may be few other economists that share his views.
“I’m probably the last drowning man who thinks that’s possible… but my view is that the dynamics that the Reserve Bank described today describing why interest rates are on hold and why they’re likely to rise – I think they’re a little too optimistic around a flaccid world economy,” said Evans.
Evans also predicted the unemployment rate to rise to 6.5% and said the weak world economy is likely to affect business confidence and consumers through job insecurity.
Strong growth in the Queensland property market, particularly in Brisbane, is likely said Evans, pointing to price hikes in both Melbourne and Sydney creating relative affordability in the area.
“There’s a huge catch-up effect which I believe is extremely likely to happen in the Brisbane market,” said Evans.