Finance advice

More economists predict rate cut

By Staff Reporter

ANZ has become the latest bank to predict interest rate cuts are just around the corner.

The Reserve Bank has left the official cash rate at a record-low 2.5 per cent since August 2013.

However, ANZ chief economist Warren Hogan said that the bank now expected the next movement in interest rates to be down rather than up.

“Weaker growth and lower inflation in 2015 will provide the Reserve Bank of Australia with a reason to take the cash rate down 50 basis points to 2.0 per cent over the first half of 2015,” Mr Hogan said.

“The fall in global energy prices means lower-than-previously-expected inflation in 2015 provides the scope for lower interest rates.”

Westpac and NAB forecast last month that the cash rate would fall to at least 2.0 per cent this year.

However, Commonwealth Bank said earlier this month that arguments for near-term rate cuts rest on “weak foundations”.

“It is now quite likely that the Reserve Bank [will] remain on the sidelines through 2015,” the bank said.


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