Bill Evans, the rates ‘whisperer’ says the best bet is no RBA Cup Day cut

Bill Evans, the rates ‘whisperer’ says the best bet is no RBA Cup Day cut
Bill Evans, the rates ‘whisperer’ says the best bet is no RBA Cup Day cut

Dubbed the “rate cut whisperer­” for his foresight in tipping RBA moves, Westpac chief economist Bill Evans says there will be no Melbourne Cup Day rate cut.

Despite the downbeat economic climate, Evans says the Reserve Bank of Australia will sit on their hands tomorrow.

“There is little chance that the board will decide to cut the cash rate,” Evans (below) advised­ Westpac clients.

While few economists think there is any probability of a November move, Evans said he was “surprised” that the market pricing for a February cut had recently tumbled.

His next forecast rate cut — the fourth since June — is for the February 2020 meeting, when Evans fears the unemployment rate will be trending away from the central bank’s full employment target.

He said the RBA was “mindful” of the recent movement in the Westpac Melbourne Institute Consumer Sentiment Index.

The index suggests that, following the consecutive rate cuts in June/July, there had been an ­apparent “spooking” of retail consumers.

While most economists had stridently tipped interest rates to be on hold during 2019, Evans was the first of the big bank economists to break from the pack in ­seeing the need for rate cuts.

Evans has maintained for several months that “there is ample evidence” that the economy is weak.

“But this is not a ­recession with the associated extreme pain for households, businesses and institutions, as experienced in the early 1990s, and 1974 and 1982-83 before that,” he said.

“Fiscal policy has considerable scope to act quickly if the recession signals strengthen; there will be a Budget surplus in 2019-20 and debt-to-GDP ratio at the federal level is low.”

Evans, who joined Westpac as the chief economist in 1991, had previously worked in the RBA’s research ­department.

Meanwhile, Sydney’s weekend auction clearance rate dipped to 79 per cent — the first time below 80 per cent since late September.

There were 672 auctions with 510 results captured and 404 properties sold.

Agents say there have been few signs of obvious hesitancy in the market where 16,000 properties have changed hands since spring began.

“Sydney has been the strongest capital city over the past quarter,” realestate.com.au chief economist Nerida ­Conisbee noted, tipping that “the supply-demand imbalance is reflective of an early cycle that will lead to strong price rises in premium suburbs”.

Last month Conisbee said: “The current correction looks like it is coming to an end. Nervousness about access to finance was the main factor driving a complete shift in sentiment towards ­housing.”

This article was first published in the Daily Telegraph.

 

 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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Rba Rate Decision Economy

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