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Staff Reporter
NAB has changed its forecast for interest rate movements for 2013, predicting that the Reserve Bank (RBA) will have to cut much more aggressively than previously expected.
In a statement released by the bank, NAB claimed unemployment and lacklustre GDP growth would put extra strain on the domestic economy.
“With the economy continuing to weaken and unemployment set to rise noticeably through 2013 the RBA will need to cut significantly further than previously expected in 2013," the bank said.
“We have reviewed our GDP forecasts and currently see 2013 at around 2.0 per cent (2.5 per cent previously), with unemployment rising to around 5.75 per cent by late 2013.”
NAB expects the first interest rate cut to occur in the first quarter of 2013; however, the bank avoided specifying a month before it had reviewed CPI results for the fourth quarter of 2012. These will be released later this month.
“Thereafter, we expect the RBA to wait to see the impact of recent policy moves but will need to react further by mid-year. We have tentatively put further cuts in May and August.
“We now expect a terminal cash rate of 2.25 per cent in the September quarter of this year,” the statement read.
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