From Peter Martin whose sources are good and whose style tells you when he’s using them:
Concern about deteriorating economic growth lies behind the Reserve Bank’s determination to cut interest rates, a move most likely at its first board meeting for the year on Tuesday.
…The bank’s previous forecast of rising economic growth published in November is now regarded as out of date and will be revised when new forecasts are issued on Friday.
…The bank believes that enough has changed since December to release it from the commitment. The oil price has collapsed, economic growth has weakened, and the steam has gone out of inflation.
It believes that if it is clear it has to cut rates, there is little point in waiting. And it is also concerned that if it doesn’t cut when it is clear it should, the Australian dollar will head back up after dropping.
…If they decide to keep the cash rate at 2.5 per cent in the face of recent developments, they are likely to indicate they intend to cut it soon, in March. But it is more likely that they will cut on Tuesday.
Precisely.
