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ISCOVER
Staff Reporter
While the Reserve Bank opted to keep the cash rate on hold last week, one economist still expects to see the rate fall by another 50 basis points before the year is out.
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“There were no surprises from the Reserve Bank, which left interest rates on hold, but with downwards revisions to its growth forecasts and benign inflation forecasts indicating a clear easing bias,” said AMP’s chief economist, Shane Oliver.
“With global conditions improving, China looking stronger, share markets up, house prices starting to rise and the cash rate having fallen by 175 basis points, we are likely nearing the end of the easing cycle. However, another couple of rate cuts are still likely to be required.
“The mining investment boom is slowing rapidly and most bank lending rates still look too high to drive a decent recovery in sectors like housing and retail at a time when the Australian dollar remains strong.”
