“The more it changes, the more it’s the same thing.”
This week in finance:RBA rates decision, on hold again (Tuesday)GDP stronger pulse, but still below trend (Wednesday)Retail sales, could be going backwards (Monday)
It may have been written about the Australian economy if hadn’t come from the pen of the 19th century French critic and journalist Jean-Baptiste Alphonse Karr.
This week’s frenzy of activity on the Australian economic front is likely to support M. Karr’s universal maxim.
The RBA will keep rates on hold just as it has since August 2016 and Australia’s economy as measured by Gross Domestic Product will muddle along at sub-par growth.
This is despite all manner of underlying changes in the domestic and global economies.
The RBA remains staunchly of the view that the current historic low of 1.5 per cent for its cash rate is the right setting and the next move, when it happens, will be up.
It was not so long ago the popular view was there would be two rate hikes this year. No one is talking that book now.
For the record the market has priced in a 0 per cent chance of move on Tuesday.
A full 25 basis point rise is not priced in until November 2019, and even that keeps sliding into the future.
External Link: RBA cash rate and forecast What about a cut?
As more economists and investment houses shift their guesstimate of when the RBA will move to further over the horizon — TD Securities and Nomura are the latest to give up on 2018 — there is a groundswell of opinion the RBA has got it wrong, and a cut is in order.
In a technical research piece on where Australia’s neutral interest rate lies, Credit