Nearly half of surveyed experts forecast quantitative easing in 2020: Finder

Experts predict the Reserve Bank of Australia (RBA) will take unconventional measures to stimulate the economy in 2020, according to the latest survey data from Finder.

In their most recent Finder RBA Cash Rate Survey™ – 33 experts and economists weighed in on future cash rate moves and economic indicators, including wage growth and housing affordability.

While economists almost universally expected no cut in December, many experts are forecasting a cut in February. This may be the last for a significant period, with three-quarters (73%) of economists saying a 0% cash rate is unlikely.

RBA Governor Phillip Lowe recently insisted that the federal bank had ‘no appetite’ for quantitative easing (QE), a process where the central bank creates new cash to decrease – or ease – the cost of borrowing.

But nearly half (46%) of experts said it was likely we’d see QE in 2020.

Graham Cooke, insights manager at Finder, said “The RBA said they may look to alternative stimulus methods once the rate hits 0.25%."

“We’re only two cuts away from that, and the three cuts of 2019 have failed to stimulate anything beyond the housing market,” Cooke said.

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On the bright side, a recession looks increasingly unlikely in 2020, with 89% of experts not expecting an economic decline and 88% thinking it unlikely that house prices will fall.

Three quarters of experts (76%) don’t foresee a significant rise in mortgage defaults, 64% think a US-China trade deal is likely and 52% say it is likely that house prices will fully recover.

Cooke said the positive outlook on China is significant because the fate of the US-China trade deal was cited as economists’ number one economic concern in the August survey this year.

While nearly all experts and economists predict a hold in December (97%, 32/33), two-thirds (66%, 22/33) expect the cash rate to drop to 0.50% in February 2020.

This figure reflects the 64% of experts who predicted February would be a cut in last month’s survey.