Westpac: 3 rate cuts to push Australian dollar to 0.66 cents

Via Bill Evans at Westpac:

Earlier this week Westpac moved forward its forecast for RBA cash rate cuts from the original forecast on February 21 of cuts in August and November to June and August.

The June cut remains almost certain; a second in August is our expectation and the November cut should also proceed.

Therefore, Westpac is now forecasting three cuts in 2019 in June; August and November to push the cash rate from 1.5% to 0.75% and to hold at that level through 2020.

Our forecasts for employment; wages growth; economic growth; inflation and conditions in the housing market are consistent with the need for policy to ease through the full course of 2019, not to go on hold as early as August.

We see the unemployment rate drifting up to 5.4% by year’s end; economic growth at 2.2% for 2019; underlying inflation at 1.4%; and the housing market still weak although approaching stability.

That means that the June and August cuts should be supported by a further cut in November.

An option which we considered was a move to some form of Quantitative Easing (QE) should the RBA see the need to ease policy further beyond the 1% level. However, consideration of the RBA’s own research on the deposit structure of major banks (see below) indicates that the RBA could be expected to anticipate that the policy transmission mechanism will still have some effect at a cash rate below 1%.

2019 also seems somewhat early to expect the RBA to embrace QE. Central banks have always favoured interest rate policy over QE until they believed that rate policy flexibility had passed or further lowering rates would be ineffective. Central banks have also mainly favoured QE to ease credit conditions rather than boosting demand.

Looking into 2020 we expect that the case for policy easing could still be apparent but as rates go lower and time passes the option to use QE will become more attractive. Arguably the RBA may see our current forecast of 0.75% as the base or possibly as low as 0.5%. Beyond 0.5% QE seems to be the more effective policy if further easing was required.

Consequently our central forecast for the terminal cash rate in this cycle is 0.75% with risks to the downside, although we would certainly see 0.5% as the floor for the cash rate, with QE a more effective policy tool thereafter.

Optimism that further easing in 2020 may not be necessary would be based on the stabilisation of the housing market; a sustained boost to confidence from a stable Federal government which would be in a position to embrace genuine reform; an improving fiscal position as the terms of trade hold up much better than assumed in the Budget estimates; and a more settled global environment as trade tensions are finally settled.

The revised terminal cash rate has implications for our AUD and fixed rate forecasts. While back in February we expected the low in the AUD to be USD 0.68 we have now shaved that forecast back to USD 0.66 by end 2019. This forecast is also predicated on our constructive view on commodity prices and a steady US federal funds rate over 2019.

Markets are currently pricing in a terminal cash rate of around 0.85% by June next year so we have marginally shaved back our bond and swap rate forecasts to reflect a lower and earlier bottom in the cash rate than priced into the market.

The case for further rate cuts

Our decision to bring forward the forecasts of rate cuts that we released in February was in response to a speech delivered by Governor Lowe on May 21 when he commented, “A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target. Given this assessment, at our meeting in two weeks’ time, we will consider the case for lower interest rates”.

However there was a fundamental change in the Governor’s approach. Whereas most of his time as Governor has been marked by an overriding concern with the risks posed to the economy around excessive household debt and frothy housing markets he has now turned his attention to the unemployment rate and labour markets.

Recall that the Bank has three objectives: stability of the currency; full employment; and economic prosperity and welfare of the Australian people. Of course “stability of the currency” relates to its objective to hold the inflation rate within the 2–3% band on average over the cycle.

The focus on household debt and asset markets emphasises “economic prosperity and welfare”.

In his speech the Governor turned to another part of his overall objective – the unemployment rate. He noted “ my judgement of the accumulating evidence is that the Australian economy can support an unemployment rate of below 5% without raising inflation concerns”. A lower unemployment rate is also supportive of the “welfare” objective, a possibility of boosting wages growth and assisting with the achievement of the inflation target.

He also noted that “monetary policy has a role to play here”.

However the RBA’s current forecasts do not inspire confidence that the unemployment rate will fall much below 5%. The current forecasts have the unemployment rate holding at 5% out to the end of 2020. It is important to note that those forecasts are based on market pricing at the time of the May Board meeting which the Board (May Board Minutes) notes as “Cash rate can be expected to be lowered by 25 basis points within the next three months and again by the end of 2019”. The forecast is also based on the AUD holding steady at USD 0.70.

With our forecast that the cash rate will be lowered by 25 basis points on June 4 and August 6 the boost to the economy from rate cuts can be expected to be somewhat stronger than if they are delayed as expected in the RBA’s forecast. Furthermore, the RBA forecast assumes that the AUD holds at USD 0.70 for the duration of the forecast period whereas the current trajectory (spot already below USD0.69) can be expected to be lower.

Nevertheless it seems unlikely that the RBA would make any significant changes to its forecasts on the basis of those second order changes in the assumptions.

The Governor notes that other policies including fiscal support through infrastructure spending; and structural reform also have a role to play.

These are longer term, necessary initiatives but the point arises as to whether the RBA should do even more than is currently factored into its forecasts. There are three key issues here:

• Westpac forecasts that even allowing for the stimulus from the rate cuts the trend in the unemployment rate is 3 Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts. Westpac weekly likely to edge up. We have a target of 5.4% by end 2019, well above the RBA’s forecast of 5%.This would reflect clear below trend growth in the economy – we expect 2.2% for 2019 compared with the RBA’s forecast of 2.6% supplemented by the weakening trend in the employment outlook – “some labour market indicators have softened a little” – RBA Governor, May 21.

• The risk of overstimulating the housing market seems low. There is some evidence that the market may be stabilising but we expect that with affordability still stretched in Sydney and Melbourne and other capital city markets now turning down due to the tight credit environment any risk of an overshooting (as we saw in 2016) in response to lower rates seems low.

• Will a lower cash rate fail to ease financial conditions due to its very low level? The issue here revolves around the RBA’s expectation of the capacity of the banks to pass on lower rates. Of paramount importance is the structure of banks’ funding arrangements. The RBA has produced a graph in the May Statement on Monetary Policy (Graph 3.6). Our estimate of the numbers in the graph is that: 8% of banks’ deposits are held at 0% interest rate; 25% between 0% and 1%; 15% between 1% and 1.5%; 42% above 1.5% and 10% in offset accounts (effectively earning the mortgage rate). On these numbers the RBA would assess that around 90% of banks’ deposits could cope with the 0.5% rate cut, already expected. Arguably, on these numbers, around 75% would cope with a further cut. These numbers are approximate and, no doubt, do not cover all issues.

Without doubt the option of QE would be on the radar screen for the RBA but, given the analysis of banks’ deposit structures, it is reasonable that they would look to lower rates in the first instance. At some level of the cash rate, perhaps 0.75% but certainly 0.5%, it is likely that the transmission mechanism from QE would be more effective in easing credit conditions and boosting demand.

The most likely forms of QE would include the RBA purchasing asset backed securities issued by the non-banks or providing attractive funding for the banks secured against their securitised portfolios of mortgages aimed at supporting existing borrowers and possibly tied to new lending targets.

These policies may well be needed to help the RBA move towards its key objectives but are more likely issues for 2020 rather than the immediate challenges which are faced in 2019.


David Llewellyn-Smith writes as Houses and Holes. He is Chief Strategist at the Macrobusiness Fund and MacroBusines Super, which is long international stocks to benefit from a falling AUD, so he definitely talking his book (or Westpac is).

Comments

  1. proofreadersMEMBER

    “Westpac: 3 rate cuts to push Australian dollar to 0.66 cents”

    Well, isn’t that (not) bang for your 75bps “buck”? And what a boost that will be for HnH’s tradeables economy? LOL.

    Also, once all bank term deposit rates are below 2% pa (= very soon), let’s see how much more financial r.pe depositors are prepared to take?

    • Funny pensioners were worried about franked dividends being cut, but I’d say far more of them receive interest on bank deposits for income and yet we didn’t hear anything about high taxing ScoMo with his tax on depositors.

      • proofreadersMEMBER

        Never even a kind thought spared for depositors – from happy clappies or whomever else. Interest income for depositors is their wage equivalent and it is certainly not a living one.

      • DingwallMEMBER

        Many of those “pensioners” (makes it sound like they wrap themselves in newspaper to keep warm) are probably sitting in their $2m house complaining. Some have the right to complain, some have had it so good they shouldn’t.

      • DominicMEMBER

        +1
        The beauty of economics is that no one understands it and the population at large rely on ‘smart people’ to manage the economy appropriately. If the ‘models’ say ‘rates to zero’ then that’s what must happen. It reminds me of a quote from the late, great Henry Ford:

        “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

  2. Bill has inside info
    He knows how shite Westpac loan book is
    If they win that case it’ll be an absolute joke

    • That is one bearish article. Basically states that 50bps of easing won’t do squat and we’ll need 75bps plus very possibly QE too.

      Does this mean he knows Westpac’s loan book is slipping under? Or just he knows something about construction, retail and employment that the RBA doesn’t?

      He doesn’t mention the global situation much either, except to call the idea of a benign end to the trade war “optimistic”. Must be downside there too.

      • I am not sure Arrow but Bill Evans has been the best forecaster for last several years, and I think he really knows what’s coming. I think he has connections in the bank and people in the bank have whispered what a true disaster it really is. I don’t know how we can’t get to 0% cash rate. Honestly, the Q is how much of the 1.7 trillion mortgage debt, will the banks even get back. I’ll be generous and say less than 3/4 of the debt will even be repaid. Honestly what job are people going to do to repay their mortgage. I have asked people and they have no intention of paying back. They are waiting for prices to go up and sell the property.

        I think this trade war is just a bunch of hog shxx, It’s just an excuse, deal or no deal, people are losing confidence, the world is in so much debt and I really don’t believe CB’s can do anything this time. They will try but QE has failed and everyone knows. Also the political landscape has changed and people will riot, if they start this money printing again. They print money and then tax people to take it back and make the poor poorer.

        I think the cash rate will possibly be zero this time next year and I don’t even think that’s extreme.
        I think RBA will do QE, I know MB says they’ll stop at 0.50 or 0.75% and do QE, but my guess is they’ll go straight to zero and do QE.
        There may be a bounce in property next 3 months as they cut but banks are still very tight, it comes down to the assessor and credit manager and say GM, not just Gov and regulators. Bank staff are running scared, they are checking everything.
        I am not sure on the AUD but 66c sounds pretty right, maybe a squeeze to 70/71 but I think its going to depend on more offshore effects. Who is going to ease more. I think we will be below 60c or around this time next year and the 10 year bond will break through zero at some stage, but lets see. Currency is not a share, it has another side, so USD needs to significantly increase for the other side to fall.

        The downturn has started, I think we aren’t far away from European bank collapses that will trigger a rush to dollars, that will break EM, who are so exposed to USD denominated loans. Looks like Deutsche Bank is on the edge. Euro election results out Monday, let’s see the swing to the right wing parties and Draghi leaves in October. Just look at the moves in global bond markets over last month or so. Even with Dow up the US and Aust 10 year yields is still near the lows. We aren’t far away from something really big and I don’t believe cash rate will dribble by a 1/4% each quarter, think we will so 0.50% or more, if we need an emergency cut.
        Gav and Peter and a few others think I am extreme but this who thing is a circus, I said late last year that Aussie 10 year will be 1.5% by Nov this year and we are here. I think we are going into recession and yield curve will invert so if the cash rate is say 0.75% like Bill says how can our 10 year not be 0.50 or 0.60% by Xmas. When people shxx themselves they’ll be running straight to Aussie Bonds, it the only place that’s not in serious debt. The Aussie Gov will need to issue 1/2 trillion or more bonds, maybe even 10 to 30 year duration and if they don’t return money to short term bond holders they won’t be able to issue out to 30 years, RBA will just print AUD.

      • Thanks BCnich. Agree 100% on Bill, he has been very reliable. Agree on debt levels too. Your comments are always very perceptive, I always read carefully!

        I don’t think the trade war is entirely rubbish. I think China is slowing anyway and mostly for other reasons, and it suits Xi to blame the trade war and not domestic causes. But the trade war if it continues can still have a material effect on investor confidence, trade and global gdp growth. In a world that is weakening anyway it could be a trigger for the next big end of cycle.

      • TheRedEconomistMEMBER

        Agreed bcnich..

        But the punters vote liberal cause they make you rich!!!! Those Labor robbers will take my Franking credit and concession and me poorer. All whilst their kids are priced out of the market and working crappy jobs whilst being outflanked and undercut by new vibrants.

        But forget all that… there is a shiny new train coming along in the Northwest… All very nice … I wonder if Transurban will start leaning on it or buy it out as Punters vacate the M2?

      • bcnich – “I have asked people and they have no intention of paying back. They are waiting for prices to go up and sell the property.” – my point exactly. I’ve been saying same time after time.
        Most (not all but most) that bought in the last 4 years never intended to repay the loans but to flip the properties at 15-20% profit. Anyone that thought they could repay them and they borrowed >6 times their earning capacity should be locked in a room with padded walls. One small fall in wages (job change, less hours, anything that can trigger 7.4589 (can’t be more specific)-15% wage drop) and they are gone – in case someone asks the WHY question.
        There is simply too much debt. I still think prices will spike as majority still think prices can go up for ever and ever and all is needed is banks to start to lend again. Next 8-12 months will be used for rest of the smart money to exit and to suck in the reminder of the bag-holders. MSM will be out and aloud proclaiming the new Renaissance period for RE and the herd will rush in again. Current spike in prices on Corelogic indices was due to some investors buying existing properties before Labour takes power will continue supported by the rate cuts and APRA relaxing of lending rules.
        So all the new buying will not be because people hope to repay those loans and this very reason will trigger the big crash as the Gov will have to find new way to keep pumping the price. The very reason that the new entrants will not be able to service those loans for long an will have to sell at ever higher price in order to play at the table again will be the end of this ponzi and why it is ponzi in first place.

        Edit – Forgot to close it.. Wage Growth. Without one we will soon hit borrowing capacity. And Chinamen are long gone.

      • DominicMEMBER

        It’s quite shocking that the world at large (99.9% of our population) appears quite sanguine about life despite cash rates at emergency levels for several years and now talk of further cuts and QE.

        They simply get up every morning, head to work, live their daily lives as if there’s really nothing to be concerned about.

        They should be fvcking terrified but instead, they’re utterly oblivious.

      • The RBA’s not going to be able to manage the coming mortgage crisis with interest rates, particularly when there’s already so little room to move. Other central banks have normalised using QE / QT as a management tool, so I expect the RBA to join the club. Government debt levels are going to have to explode higher to facilitate bailouts and any talk of a surplus is a total joke.

  3. What’s the easiest/least amount of risk to move aus dollars out of banks. Is it to late?
    Thanks in advance

    • Assuming you are not looking to trade the weakness, but rather move purchasing power to somewhere it will keep, go with TransferWise. Basically, no leverage, but decent enough rates. They are working on credit cards so you can/should be able to use the credit cards in whatever currency you need (in oz/overseas), but full convertibility is only available in a few actively traded currencies.

      We use it to pay contractors and overseas suppliers. Its messy maintaining a USD/AUD in the accounts, but realistically, will have more in USD probably from end of year. Effectively I think many small businesses with USD exports will move to models where they are USD base ccy, with some AUD exposure for paying local salaries.

    • T – are you asking about moving AUD out of banks but keeping them in AUD? Or are you asking about moving them into another currency (onshore or offshore)?

      • Moving out of aus banks to foreign currency, can get a japanese account thinking about utilizing. If aus dollar going to drop might as well try to make my money go further but want smallest risk as it’s a lifetime of savings.

      • DominicMEMBER

        “Gold is very volatile – too speculative for my tastes. Also doesn’t pay a yield.”

        Plenty of blue chip gold miners out there paying a dividend. Or the royalty plays.

        Or just buy a US Treasury bond. The 2yr looks at a yield of 2.2% looks sound to me and covers all your bases.

      • Yes indeed. The short term bonds are the best for some yield and zero volatility (hold to maturity). I got mine when they were 2.5% but when they roll over I’ll be forced to take 2.2%!

        The gold stocks do pay dividends but are also more volatile and can crash along with the rest of the market so if you are purely after safety it’s the bonds. Not much return of course.

    • I have a $USD account with Westpac but the $250k Government guarantee doesn’t apply. So I may create a similar $USD account with CBA and look to see if the other big 4 offer same and spread my money and risk that way.

      I also have a European bank account in Ireland from when I was living there and so I have Euro in that account, but Euro falls with $AUD it seems.. so I may convert it to $USD also.

      Problem with banks is they give you the loudest exchange rates. In my case it’s the difference of $12,000 + if I was to convert via their rates. So I will look at currencyfair.com which I’ve used in the past to make $USD payments.

      • Yes, I use currencyfair between overseas and Australian accounts, and also between two Australian accounts with different currencies. Very competitive exchange rates.

      • TransferWise seems to have better conversion rates than CurrencyFair – just checked it for the EUR – AUD combo.

      • DominicMEMBER

        Gav, if you can, buy a 2yr US Treasury bond. No bank exposure. ~2.20% coupon. US$ denominated. May have to open an account with Citi to do so – or do it via Treasury ETFs.

        OZForex are excellent, FYI. I use them all the time. Their rates are heaps better than any of the Aussie majors.

    • DominicMEMBER

      Buy a 2yr US Treasury bond. No bank exposure. ~2.20% coupon. US$ exposure. You can’t get better than that — US Govt risk. Alternatively buy gold exposure via stocks — but be prepared for volatility.

      • DominicMEMBER

        @Burb
        I doubt it but worth checking. 2 options spring to mind:

        – get exposure via an ETF – check out SHY, ITE and SIPE (inflation hedge). Expense ratios are fairly sensible. VGLT gives you long-dated exposure but I’m leery of duration at this point. I think we will see the curve steepen in the latter part of the year so 1-3yr is probably the pick.
        – open an account at Citibank Australia and buy a treasury through them. (I’m assuming it’s possible).

      • C.M.BurnsMEMBER

        Burbwatcher – I’ve been doing research for a few months on how to buy US Treasuries directly. Settled on Charles Schwab account. Gives direct access to US stock and bond markets; cost per trade is really cheap and they specifically have a process that caters to international investors including Australia.

        I’m just finishing the process of getting my account now. The only caveat is that you need $ 25k USD to open the account. But there’s no minimum amount per trade. Unlike when you try and buy US stocks/bonds through Australian exchanges, where the transaction fee costs a bomb and there are minimum amounts – usually high

      • Gold is very volatile – too speculative for my tastes. Also doesn’t pay a yield.

    • I’m taking the other side of that trade.

      It will be a slow descent, with any drop due to cut or jawboning followed by a fast short squeezes and dead cat bounces. You’re better off fading any drops than taking a passive short position.

      • There is no doubt that i am simple but i do know how to read a chart. And history would say that the aud can drop hard and fast and does thus about every 5 years. Now if you really are going to short the aud no good getting out early as you likely to miss out big time.

      • I started buying USD at 1.07 in USD then flicked it all Into YANK – just wish YANK had been available 5 years earlier.
        In the end it largely depends on iron ore and on Aussies bank mortgage risk. My pick is 0.42c and I’d be more than happy to sell at 0.50 and walk away laughing as Aussie house prices halve

    • 56c or even bellow but not before IO, Coal and Gas prices dropping by lot. Especially IO as China can just shift to buying coal from Indonesia and N Korea and more gas from Russia. But IO is different ball game especially since US got their man in Brasil. And Chinese students and tourists being abruptly stopped.

    • Main risk I can see to a lower AUD is that US Fed might cut. Smaller risks include: Brazil gets worse not better (another iron ore disaster or more delays) sending iron ore higher still. Or trade war resolves nicely (I dont think so).

      So there is that. But I’m staying long USD for now.

      • I’m in the damaged camp given I shorted the AUD twice and lost. I put myself in check and since then I’ve been convinced it’d drop, and proven wrong. For some reason the professional currency traders know all this stuff, and I agree with you 100% and so event could trigger it; even big move by the CCP to block our minerals. Might be a time to load up more on USD’s. With all the trade war and other conflicts we’ll be lucky to get through 2019 without some event probably.

      • Afund – I see a difference between being short AUD and being long USD (ie holding actual USD or USD assets like bonds or equities).

        Being long and staying long has no carry or holding costs and there is no leverage and no margin calls – it’s your own money. You can also earn a return / interest depending upon what you do with it and your risk tolerance (i am out of equities now!)

        My reason for doing this is to guard against problems in Aus banks and to make some modest money on the falling AUD (Yes there is still risk in this part but a lot less than if leveraged).

      • I’m with you. I sold out most of my stocks this week. Five left but l’m long on lithum Au and a few nedical ones. And like you I’m holding real USD’s. I’ve still got div stocks in my super though

      • NIkola – buy USD from someone like Ozforex and have it paid into a USD account locally or o/s … I use HSBC for a local and US based accounts

      • Before you choose your USD or multi currency bank account, check the fees including for money transfers.

        Some banks charge a % fee! NOT GOOD.

        Some charge a small flat fee. Not ideal, but a lot better.

      • @Nikola…I have a few k on a currency card, and a HSBC account, but it’s in the US where I worked. But you can get one here as I also have a local HSBC a/c and they said I can open one, and Westpac as well. The other thing I had until this week is IVV.AX. Not real USD but exposure to S&P 500 index. I did reasonably well out of it, but I also had individual tech stocks which I’ve also sold. I did that through Commsec. Once you do the paperwork you can trade US stocks.

        http://dividend.net.au/sp500/

        https://au.finance.yahoo.com/quote/IVV.AX?p=IVV.AX

    • DominicMEMBER

      Don’t play in currencies — at least not futures. You’ll be carried out.

      If you have that strong a view buy Put options instead.

  4. Have noticed in my area the knock down and rebuild has almost stopped. Does anyone have access to the demolition permit figures. I recon this would be the best leading indicator of the housing situation.

    • Duplex subdivision was a FIRB approved route for Foreign investors into existing housing. The Drop off in Chinese money might be what you are observing.

  5. Trout à la Crème

    ‘The risk of overstimulating the housing market seems low.’
    Too late for that.

  6. TheRedEconomistMEMBER

    Channel 9 talking up Real estate like the no tomorrow.

    Spruikers talking up a trifecta of good news.

    Rate cuts on the cards, credit rules loosened and Labor’s negative gearing changes not happening.

    Nothing wrong here .. move on. Prick$

    • What else are they gonna talk about?

      Personally, I think it’s BS…but couldn’t be happier. What better way to truly crush sentiment than a much hyped but short-lived turn around?

      There’s not getting any…and then there’s not getting any after a massive prick tease. We all know what’s worse.

  7. Housing: “any risk of an overshooting (as we saw in 2016) in response to lower rates seems low”. Disagree. If we get three cuts that quickly then they will either get a mild to nothing response – panic ensues. Or this thing starts fishtailing. They would be very unwise to juice that hard only to then need to jam on the brakes again. That kind of vol would make the optics irredeemably bad and confidence would evaporate overnight. I think Bill has the call on three wrong here. As HnH has rightly called, on this and macroprudential, they have been too late to act both times. Three in that time would concede their failings and drop the facade of control totally. No CB can afford to do that!Besides this big debt truck has never been more loaded, fishtailing would be a really bad idea.

    • Whose perception of control and confidence are you talking about?

      One camp seems to think the masses will lemming-like borrow to the absolute max to drive up prices, blind to any market and macro factors.

      If they’re right, the optics of 3-cuts will be irrelevant to the “it’s about serviceability, not total debt” crowd.

      That crowd exists, and for that reason I think we’ll see more than a mild or nothing response in house prices, albeit relatively briefly, as the macro environment then starts to takes over.

    • DominicMEMBER

      Worst case scenario: 3 cuts and no improvement in house prices.

      Watch out below.

  8. There is more than one way to deflate a bubble. One such way is to crash AUD.

    If a house was worth, say, 100,000 bottles of Coke before the bubble, and became worth 300,000 bottles of Coke, and then became worth 100,000 bottles of Coke again, it means the bubble had fully deflated.

    • However the more consumption dependent the economy is (particularly CAD economy) the less effective is the exchange rate buffer. It may even become counter productive at some point

  9. ChristopherJMEMBER

    75 bips will only deliver 45 for borrowers. The 50 bip move was appropriate when rates where in doubles, not now.

    The bigger likelihood is a new conflict in the world. We are way overdue. That will put the poo closer to the 50s

    Wasn’t so long ago that we were there

  10. Jumping jack flash

    Woohoo!!

    Cutting interest rates means cheaper debt – if the banks pass it on.
    Couple that with another FHB grant, and that pesky housing crisis is well and truly averted. House prices rising again. Phew, that was a close one!

    (Royal commission? What? Hope it didn’t cost too much. On the bright side I’m sure more money has been wasted on less useful things)

    Cutting interest rates means a lower dollar.
    Because we import most of our useful items, a lower dollar means inflation! Yes! Precious inflation!
    if we hit 2 – 3% it means the economy is back on the road to recovery!
    Boom times ahead!

    Those libs are masters of economic management aren’t they? Yup yup yup! No problems. Just keep spending debt.
    We made the right choice.

    But don’t expect any extra money in your wages.
    And don’t expect anything useful to actually become any cheaper, like food or energy, for example.
    No sir.

    But on the bright side you may pay $50c/week less tax though, so I guess that’s some way to give the illusion of rising incomes in this ruined economy of debt, gouging, and little else.