From the AFR:
The Reserve Bank may be forced to cut the official cash rate before the end of the year to beat back of a wall of foreign money that has driven the Australian dollar higher, according to Goldman Sachs Asset Management’s bond expert Phil Moffitt.
Mr Moffitt, a 30-year veteran of the bond market and one of Goldman’s most senior Australian partners was speaking at the sidelines of the $935 billion asset managers’ client conference in Sydney.
He said the confluence of weak domestic growth, an expected fall in inflation as the carbon tax is discarded and the high currency was pointing towards a potential cut in the official rate cut below its current 2.50 per cent setting.
“The game plan has been the RBA to hold rates stable, and accept the currency is overvalued, in anticipation of the Fed moving [to lift US interest rates],” Mr Moffitt said.
“But the more the Fed works to pacify market expectations of a rate rise, the stronger the local currency gets and the harder it is for the RBA to manage,” he said.
More or less the MB view, with increasing macroprudential from APRA.
