Suddenly, someone else imagines Aussie ZIRP

Monday 2 May 2016

For a years MB has maintained that the Australian economy is not different only one cycle behind and that Aussie interest rates are headed to our version of zero, which we estimate to be in the vicinity of 75bps given the need to fund the current account deficit. Now Macquarie is the first ‘proper’ investment house to imagine similar:

 We think the RBA will cut rates on Tuesday. Whilst we shifted back our long held forecast for a May RBA rate cut to August following the labour market data (see Aussie Macro Moment – Labour force: Unemployment rate surprise to keep the RBA at bay) we reinstated our forecast for a 25bp cut following the surprisingly weak 1Q16 CPI outcome (see Aussie Macro Moment – CPI 1Q16 – Shocker!).

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About the author

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.