Odd one out, fund manager Ausbil Dexia joins Australian economists tipping Melbourne Cup Day rate cut: Bloomberg

Boutique fund manager Ausbil Dexia has fallen into line and is now among 23 out of 27 economists tipping the RBA to cut the cash rate to 3% on Melbourne Cup Day, November 6.

In Bloomberg's October 12 survey of econ0mists, Ausbil Dexia was the only Australian-based financial institution tipping the RBA to leave the cash rate on hold at 3.25% in November, along with overseas-based institutions Capital Economics, Goldman Sachs, J.P. Morgan and Moody's Economy.com.

In the latest survey (October 19) Moody's has joined Ausbil Dexia in changing its expectation from a rate hold to a rate cut on Melbourne Cup Day, with Capital Economics, Goldman Sachs, J.P. Morgan and now also Deutsche Bank tipping the RBA to leave the cash rate unchanged on November 6.

According to its website Ausbil Dexia is an "Australian equities specialist with approximately $11 billion in funds under management".

The firm was established in April 1997.

It's core business is the management of "Australian equities and emerging leader investment portfolios for major superannuation funds, institutional investors and master trust clients".

The firm is headed by chief executive Paul Xiradis, who has 30 years of experience in funds management including roles at Westpac, Delfin and Mercantile & General Reinsurance Group.

Ausbil's chief economist is John Honan who has worked for the Federal Treasury in Canberra and also held the position of chief economist for the NSW Treasury Corp.

Attempts to contact the fund were not successful, however in its most recent October Economic Observer, the firm remarks that the recent fall in commodity prices will continue to result in a deterioration in the terms of trade and "translate into an income shock to Australia, the expected impact of which we have already seen manifest in the October RBA rate cut".  

"In addition to this reduction, futures markets are pricing in another 0.75% worth of cuts over the next six months," Ausbil Dexia notes.

"The benefits of a lower official rate and Australian dollar should however be felt across the non-resources sectors of the economy; in particular the likes of tourism, housing and retail spending.  

"This signals the beginning of an inflection point where we expect the two-speed economy to converge into a more balanced one speed economy – resources contracting from high levels of growth whilst non-resources to improve from moderate levels of growth."

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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