A senior economist believes the faltering economy needs another rate cut and that a move on Melbourne Cup Day – when the RBA next meets – is likely.
Melbourne Cup Day has become synonymous with rate movements and the senior economist at Domain Group, Dr Andrew Wilson, said the first Tuesday in November again looks an ideal time for the RBA to move.
“We’ve just had our regular interest rates meeting to determine their settings for September and there was no surprise that rates were left on hold for the 13th consecutive month, and the last time that happened was a decade ago when we had a similar lengthy sequence of no change,” Dr Wilson said.
“I still think there’s downward bias in interest rates and, out of left field, we may even get an interest rate cut on Melbourne Cup Day, and [the RBA] has had a tradition of doing that.
“A lot of that has to do with the unemployment numbers over the next two months. They’re tracking upwards and that’s a concern for the Reserve Bank when we now have three major states with unemployment rates at seven or over seven per cent.
“So yes, if there’s a continued deterioration there [in the unemployment rate], I fully suspect we will get a rate cut come Melbourne Cup Day again. The tradition returns perhaps,” he said.
In a recent straw poll conducted by Residential Property Manager's sister publication, The Adviser, respondents were asked where they believed the cash rate would be by Christmas.
Just shy of 65 per cent voted for no change, 27.5 per cent agreed with Dr Wilson that it would go lower, while four per cent thought rates would go higher, and a further four per cent said they didn’t know.
The last time the RBA moved on the cash rate was in August 2013 when Kevin Rudd was prime minister.