Case for interest rates cut steadily building: Shane Oliver
AMP Capital Investors chief economist Dr Shane Oliver views the global outlook as looking softer than the Reserve Bank of Australia has been assuming.
“This combined with a continuing run of very weak economic indicators in Australia highlights why it would be a major mistake to raise interest rates any time soon.
“In fact, the case is steadily building that the next move in the cash rate will be down,” Oliver says.
Oliver says the global malaise affects Australia via three key channels: the direct impact on business and consumer confidence, the financial markets and trade.
“While demand for Australian exports remains strong, the risk is the weakness in Europe and the US adversely affects growth in China and Asia which then reduces demand for Australian exports.
“So far there is no clear evidence of this, but it is worth keeping an eye on,” Oliver says.