RBA must cut the cash rate on Melbourne Cup day: John Symond
Aussie Home Loans founder John Symond says the Reserve Bank must cut the cash rate on Melbourne Cup Day (November 6).
“Australia continues to be susceptible to economic shocks from overseas and small retailers and businesses are doing it tough as we head into the crucial Christmas retail season," Symond told Fairfax.
According to Symond, a rate drop would boost retail sales and the rest of the economy – especially employment – “providing much needed confidence to consumers”.
His calls for a rate cut come as the certainty of a Melbourne Cup rate cut shrinks from a sure bet a few weeks ago to now only a "50-50 call", according to Commonwealth Bank chief economist Michael Blythe.
Symond has been critical of the Reserve Bank for being too slow to move on rates in the past, accusing governor Glenn Stevens and the RBA board of being “asleep at the wheel”.
He has also dismissed arguments that lower interest rates could fuel a housing bubble.
“I am confident, notwithstanding a lot of hype from offshore analysts about a housing bubble, of Australia’s fundamentals,” Symond said in a speech in October.
Among those who disagrees with Symond on the need for a November rate cut is Annette Beacher, head of Asia-Pacific research at investment bank TD Securities.
Beacher says an expansion in Chinese manufacturing (as seen in an improvement in the Chinese manufacturing index from 49.8 to 50.2 in October) as well as a stronger than expected rise in inflation in the September quarter are two reason why the RBA should pause in November.
“The RBA can afford to pause at 3.25%t and 'wait and see' for the next round of monthly data, as well as assess the impact to date of previous easing," she said in a note to clients.
