NAB bring forward RBA cash rate cut to October

NAB bring forward RBA cash rate cut to October
Joel RobinsonSeptember 19, 2019

The National Australia Bank have brought forward their rate cut forecasts, now suggesting there will be a cut next month.

Their decision was based on the muted impact of the income tax cuts, which has "failed to offset growing weakness in the household sector."

"With monetary policy involving longer lags, we think the urgency to lower rates sooner has increased," NAB economists Gareth Spence and Kieran Davies said.

"We previously anticipated some further support from fiscal policy but now believe this is unlikely in the near term," they advised.

NAB have also brought forward their next rate cut to December, which would bring the official cash rate down to 0.5 per cent.

They had initially forecasted cuts in November and then February. They forecast the rate will drop down to 0.25 per cent by mid-2020 without meaningful fiscal stimulus.

"While strong public-sector spending has been a significant support to growth over the past year, as have exports of commodities, this pattern of growth suggests unemployment is likely to edge higher," Spence and Davies said.

"Our current forecasts look for this divergence to continue, with dwelling investment declining further and consumption growth remaining modest."

 

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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