BoAML: RBA to cut in August and September

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We warned BofAML in January that it was wrong:

We continue to expect the RBA to remain on hold this year but concede the case for hikes in 2020 has weakened.

…The change in dynamics is more centered on the outlook for global growth, in our view, rather than a step change in the risks around the domestic housing slowdown.

…A necessary condition for a change would be a change in robust labor market dynamics.

Over 250,000 jobs were created between January to November, of which more than 60% were full-time, down from the record of 410,00 in 2017 but double seen over 2016.

While we concede the labor market lags the economy, the leading indicators of labor demand remain positive.

No, are do not:

Today BofAML capitulated, shifting to two cuts in August and September. They are right about one thing. The RBA never stops at one.

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.