Via the excellent George Tharenou at UBS:
For the RBA outlook, given the limited policy firepower at a 1.5% cash rate, & our deep dive showing banks likely won’t pass on the full reduction, to make cuts more effective, the RBA should communicate a ‘dovish easing’, with a commitment to further ease if required to support growth. This would support confidence, & allow the market pricing to ‘carry the cut’ via a lower terminal rate & maintain downward pressure on the AUD. Otherwise if the RBA’s cut is ‘reluctant’, the market reaction may deem it as hawkish, & provide limited ‘bang for buck’. This may force an even greater than desired easing later on to ‘shock the market’…UBS think if the RBA’s 50bps of cuts fail to stabilise housing, we can’t rule out the RBA being forced to cut below 1%. Indeed, UBS think investors need to consider extreme scenarios given in 2012 Lowe said “Somewhere around 1% plus or minus a bit…other options of unconventional monetary policy become viable”.
Exactly. Put George in charge. He’d certainly do a better job of forecasting. Sheesh:
Nothing like backing the 15% chance roughy over and over on behalf of the nation.
