NAB add second RBA rate cut in to forecast

NAB add second RBA rate cut in to forecast
NAB add second RBA rate cut in to forecast

The NAB have forecast a rate cut for June 2020, following an already predicted cut in February.

The two cuts will take the official cash rate down to 0.25 per cent. It already sits at a historic low 0.75 per cent.

"At this point, we see an increased risk of a move to ‘unconventional’ policy in H2 2020 should the labour market deteriorate more significantly than we forecast, with low inflation posing little constraint to further easing," NAB group chief economist ALAN OSTER advised.

"Previously, we had pencilled in only a further 25bp cut to the cash rate and hoped to see a material support from fiscal policy, which now looks unlikely in the required timeframe.

"Our forecasts of below-trend growth, a deterioration in the unemployment rate and inflation firmly below the RBA’s target band are broadly unchanged, but clearly imply the need for policy makers to do more."

In November NAB pushed their next cut forecast to February.

They suggest June will be the final cut before quantitative easing begins.

NAB believe employment growth will be slow and unemployment will drift further above the non-accelerating inflation rate of unemployment.

"Indeed, our forecasts for the household sector and business investment are notably weaker than the RBA’s, although we remain more optimistic on public spending," Oster added.

"Should the data turn out weaker than our forecasts, there is a real prospect the RBA moves to unconventional policy in H2 2020."

 

 

 

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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Nab Rate Cuts

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