Credit Suisse: Co-ordinated stimulus looms

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Via the excellent Damien Boey at Credit Suisse:

Ahead of the Federal election, policy makers are showing their hand on stimulus prospects.

On Friday, the RBA revealed in its Statement on Monetary Policy (SoMP) that 2 rate cuts factored into market pricing, will only be sufficient to get real GDP growth to 2.75% by the end of the year. Importantly, market pricing of 2 rate cuts was not enough to stop the growth forecast from being revised down by 25bps. To be sure, Bank officials are waiting for labour market data to deteriorate first before cutting – but almost every leading indicator of labour market activity has deteriorated recently, and it seems to be only a matter of time before the ABS prints a bad number. Also, it is convenient that the Federal election will soon be out of the way.

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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.