There’s a strong case for more interest rate cuts in Australia, according to Credit Suisse.
Its predictive model of the cash rate, which includes business and consumer confidence, inflation expectations and unemployment, suggests interest rates could fall to 1.5% (implying four more rate cuts) in the year ahead.
“Confidence is low and consistent with weak growth,” Credit Suisse strategists Damien Boey and Hasan Tevfik say. “Inflation expectations are falling and the unemployment rate is rising. Also, mortgage principal repayments are rising, as interest-only loans reset. All factors point to lower rates.”
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
