A preview from Westpac on the Reserve Bank of Australia monetary policy meeting Tuesday 1 November 2016.
The bank expects the RBA to remain on hold (this is the consensus market view)
Westpac's Chief Economist Bill Evans doesn't add much to his expectation of no cut (though he has elaborated on this a great deal recently, he has been in the 'no imminent cut' camp for a long time)
Evans instead focuses on the question of what is to come in 2017. On this:
- The rate cut scenario would hinge around persistently low inflation; a widening gap between current employment and full employment; and a disrupted housing market. Disruption might lead to falling prices and the expectation of a severe construction downturn in 2018. As discussed, we see stability and upside risks in housing but accept the 20% probability which is currently in the market as reasonable.
