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Rate cuts to resume next month

By Reporter 17 September 2012 | 1 minute read

The Reserve Bank of Australia is warming up to resume rate cuts next month, according to a chief economist.

Due to global pressures and the potential resumption of carry trades that may see the Australian dollar pushed higher, the pressure is on for a rate cut, according to AMP Capital’s chief economist and head of investment strategy.

Australian economic data has remained ‘generally soft’, Mr Oliver noted in his weekly report.

“Housing finance fell in July and is still stuck in the basically sideways trend it has been in since the start of last year. While dwelling starts rose in the June quarter, this was driven by a rebound in normally volatile multi unit starts after weakness the previous quarter. The broad trend remains soft.

“The NAB business survey for July showed a rise in conditions but a fall in confidence but with both remaining sub-par,” he explained.


While consumer sentiment was seen to rise slightly over September, this may have been on the back of talks of more rate cuts.

“Our assessment is that the RBA is shifting back towards an easing bias ahead of the resumption of rate cuts in October. The ongoing rebound in the $A is only adding to the urgency for more rate cuts,” he said.

Rate cuts to resume next month
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