Foghorn: No RBA cut coming in November

Via RBA foghorn, Terry Mccrann:

It will leave its official interest rate unchanged at its regular and decidedly idiosyncratic Cup Day meeting.

Leaving the rate unchanged was already the most likely outcome of the meeting before Thursday’s monthly jobs data; the continuing good news on jobs made it a slam dunk.

…The next rate cut, if it comes, is the really ‘big one’. It would really have to be absolutely unavoidable. It would also need the RBA to have ‘pre-committed’ to doing ‘something else’ like QE, quantitative easing or printing money.

Cutting from 0.75 to 0.5 per cent could be the rate cut that is almost entirely theoretical — producing virtually no change in either deposit or borrowing rates.

On the borrowing side the banks would cut between five and ten points — mostly because they couldn’t cut much off their deposit rates, especially those that are already at zero.

With the trade non-deals lifting markets for a bit, February, 2020 is firming for the next cut.

Houses and Holes

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 fouding 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.

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