Economists divided over rates

Economists divided over rates

by 0 comments

Economists are divided as to whether or not the Reserve Bank will cut the official cash rate tomorrow.

Earlier this week, HSBC chief economist Paul Bloxham said he expected to see the Reserve Bank (RBA) leave the cash rate on hold, as new data showed the nation’s capital expenditure fell by less than expected.

“Mining investment is set to plateau as a share of the economy, not plummet, and non-mining investment is set to rise next year. So, we expect the RBA to be on hold next week,” he said.

But while Mr Bloxham expects rates to stay on hold, it seems not everyone is sure.

AMP’s chief economist Shane Oliver said he expects to see the cash rate drop to the historic low of 2.5 per cent at the June board meeting.

“I must say though, it’s another close call, as the RBA may decide that having cut in May and with the fall in the Australian dolla,r it will wait and assess for now,” he said.

“Against this though, the Australian dollar hasn't really fallen enough to provide a big stimulus to the economy. The latest business investment readings confirm that mining investment has peaked and that non-mining investment is likely to remain weak, readings for business and consumer confidence have been poor, forward looking jobs indicators are soft, and the toughish Budget and Ford's decision to quit manufacturing seem to have added to the sense of gloom surrounding the Australian economy.

“As a result, with low inflation providing plenty of scope to ease, the RBA should act again on its easing bias and on balance, we think that it will.”

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2017

With a combined sales volume of over $14 billion in 2017, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
Learning from the best led Michael Clarke to success

In this episode of Secrets of the Top 100 Agents, number four-ranked agent, Michael Clarke, returns to the studio to explain why he’s less...

View all podcasts

How difficult is it to maintain a good work/ life balance?

Very – if I’m having balance my competitors are working
Not – I schedule the time into my calendar in advance
A little – It’s scheduled, but something always crops up
Work/ life balance – what’s that?
Do you have an industry update?