Forget rate hikes in 2018

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There a lot of prognosticators sticking their noses in but the following from Paul Dales at Capital Economics is the best I’ve seen:

Despite the strengthening of the activity data, the Reserve Bank of Australia won’t raise interest rates from 1.5% at the meeting on Tuesday 6th February and probably won’t hint in the following Friday’s Statement on Monetary Policy that rate hikes are just around the corner either. The rising Australian dollar has already tightened financial conditions and the outlook for inflation is still weak. Our money is on the RBA leaving interest rates at 1.5% at all eleven policy meetings this year.

In November of last year, RBA Governor Philip Lowe said that “it is more likely that the next move in interest rates will be up, rather than down…but there is not a strong case for a near-term adjustment in monetary policy”. He kept his word just two weeks later by leaving interest rates at 1.5% for the 16th month at the December meeting and it’s probably fair to assume that the phrase in the “near-term” covers the first meeting of this year in February too.

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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.