MB’s favourite interest rate prognosticator is back this morning, as predicted, with more rate cuts in his satchel, three of them to be precise:
We expect the Reserve Bank will complement its May rate cut of 25 bp’s with a follow up move of 25 bp’s in June. Rates are expected to eventually bottom out at 2% by the first quarter of 2014.
In May last year Westpac forecast that the low point in the cash rate cycle would be 2.75%. At the time the Consensus view was around 3.25–3.5%. We have held that view consistently since then while emphasising clear downside risks over the last six months. With the Reserve Bank cutting the rate to our target level yesterday it is appropriate to quantify those downside risks.
Full rationale below.
Advertisement
