Interest rates: what the economists say

Interest rates: what the economists say

Interest rates: what the economists say

Westpac chief economist Bill Evans

In May last year, we forecast that the cash rate would bottom out at 2.75 per cent some time near the end of 2012 or the beginning of 2013. Today's statement has given us encouragement that this last leg in the cycle is likely in the near term and we maintain our call that another cut can be expected in March.

UBS senior economist George Tharenou

For now, there are tentative signs of improvement in the non-mining economy — confidence and housing in particular. If they continue, this should allow the RBA to stay on hold from here, and possibly for an extended period.

CBA chief economist Michael Blythe

The implication is that any stumble in the non-mining economy will be accompanied by a further interest rate nudge. Low inflation is a necessary condition in allowing the current policy approach to work. RBA inflation commentary is a little less explicit than usual. But the expectation is that slower growth in labour costs and rising productivity will keep inflation low as the benefit of falling import prices ends. These are strong assumptions and are yet to be confirmed by the data.

Citi senior economist Joshua Williamson

The Reserve Bank is taking a glass-half-full view of the economy — that we will see a productivity improvement, that we will see the international economy lift Australia somewhat, and that the domestic economy will respond to that. But I think the risks are to the downside there that we don't see this response.

Barclays chief economist Kieran Davies

Though they've got an easing bias, they would need quite a lot of convincing to act because they think the rate cuts they've done [so far] are substantial. Things could still go wrong overseas, but at this stage with the world backdrop being better and with those initial signs of earlier rate cuts working, I'd say that the bank would be pretty happy if they could keep things where they are.

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