I haven’t seen this much interest in an RBA decision since the bullhawkian panic of 2011. Dr Doom’s mob has weighed in:
“The RBA’s meeting next week will likely see no rate change, but a shift in language toward easing in the face of weaker expected global growth and the downshift in global rates. A cut of 25 [basis points] in the next three months is already priced into the market, but looks too aggressive to us,” RGE told clients. The forecaster has a 2 per cent cash rate factored into its expectations by the end of the fourth-quarter of 2015.
And Charlie Aitken via Forexlive (since he cut me from his mailing list):
- Says the RBA is “well behind the curve, both metaphorically and literally”
- “I am of the view a 25bp rate cut on Tuesday afternoon is a certainty”
- “a 25bp rate cut is now 100% priced into the Australian bond market, the Australian Dollar and Australian equities”
- “Don’t believe anything you read about only “50%” of economists predicting a rate cut on Tuesday. The Australian financial markets are fully discounting the rate cut and in my view it is 100% priced in”
- “The risk the RBA board faces is NOT delivering on the markets expectations. It would a terrible misjudgement to feel the Australian Dollar has fallen and NOT to cut rates. … The RBA needs to deliver on the financial markets expectations or be prepared to watch the AUD move quickly back above 8o”
- “I expect no dramatic price reaction to confirmation of the rate cut, the only dramatic price reaction would come if I am proved wrong and the RBA stands pat.”
Aitken is right. The RBA is MILES behind the curve. Roughly 3 years by my reckoning. I give it a 60% chance for a cut tomorrow given the gastropods in control. 99% by March.
