And so the sell side begins to fall in line, Deutsche changing its rate outlook today, from the SMH blog:
The DB economists expect unemployment to peak at around 6.75 per cent in 2015, from 6.2 per cent now, levels that would “ordinarily be consistent with interest rate reductions”.
They write: “What has prevented us, until now, from actually forecasting rate cuts has been the strength in the housing market – in particular house price growth and the degree of investor activity.”
But an easing housing market and regulatory measures to improve the quality of lending – which are expected to “‘tilt’ the balance a little in favour of owner occupiers and away from investors” – should help ease the RBAs concerns that looser monetary policy would stoke an already hot property sector.
“As always, there are risks to any economist’s view,” they write. “In this case the key risks would appear to be a stronger labour market that we expect, or an absence of moderation in parts of the housing market. Obviously, a much weaker AUD could also, in the absence of further declines in the terms of trade, negate the need for rate cuts.”
Yep, first cut in Q2, second in Q3/4.
