Tipping point anybody? Normally Australia’s big banks would soar on rate cuts as volume growth and curve steepening lifted their profits outlook. Not today:
Smash. And why we know, from Goldman year’s ago:
…if the cash rate was to fall below 1.50%, every additional rate cut thereafter would shave about 5 bp off sector margins. The sensitivity of margins to falling rates accelerates once the cash rate falls below 1.50% because the various levers the banks have at their disposal become less flexible as the cash rate approaches zero and we would particularly highlight the following:
