Major delays rate cut call

by AB03 Oct 2013

Major bank NAB has announced a swing in its rate cut predictions, saying the RBA is unlikely to lower the cash rate until February next year.

Up until now, the lender had been outspoken in its belief that the RBA would react to a ‘softening economy’ ahead and lower rates further before the end of the year. However, they now believe that date could be pushed back several months.

“Indeed, our analysis suggests that the economy will slow, with GDP growth softening to around 2% by the end of the year, rising to a still sub-trend 3% by the end of 2014,” says a NAB spokesperson.

“Private domestic demand is even worse in our forecasts, slipping to about 1.25% by the end of 2013 and likely to be near flat through 2014. GDP is stronger only because net exports will keep rising, as new resources projects come on stream with substantial contributions to annual GDP of about 1.8 percentage points through 2014…Essentially, this evolution of the economy will convince the RBA of the need for a more accommodative monetary policy stance.”

However, while the ‘big picture’ remains firmly in place, according to NAB, the RBA’s recent statements have indicated they’re comfortable with recent developments and that there is therefore no ‘imminent’ rate cut on the cards.

“Accordingly today, we have decided to delay our rate cut call from November to February, allowing the RBA time to pause and watch the data. With the big picture still unmoved, we continue to see a cut coming but right now there is no rush.”


  • by Brisbane Broker 3/10/2013 11:08:37 AM

    Our economists are great. They are like virgin person writing a sex book.