RBA likely to cut the cash rate to 0.25% by June 2020 – Westpac

Bill Evans, Chief Economist at Westpac now expects two cash rate cuts from the RBA in 2020 to a low point of 0.25% in June and suggests that Quantitative Easing will likely follow in the second half of 2020.

Key Quotes

“Westpac has not changed its rate call for the RBA since July 24 this year. At that time we envisaged two more cuts from the RBA in October 2019 and in February 2020.”

“That would have seen the terminal cash rate in this cycle at 0.5%.”

“We expected that the final cut in February would have been insufficient to provide the RBA with enough comfort that the economy was moving into line with their growth; inflation; and unemployment targets.”

“The minutes of the November RBA Board meeting provided some support to our view when it was noted the Board “also discussed the possibility that a further reduction in interest rates could have a different effect on confidence than in the past, when interest rates were at higher levels”.”