David Bassanese at the Australian Financial Review says (gated) that the RBA is ‘unlikely’ to cut rates on Tuesday but the following meeting, in February, could be a different story.
The RBA’s own economic forecasts suggest a further cut in interest rates is virtually assured – unless the $A drops. After all, based on the technical assumption of an unchanged exchange rate, the RBA is forecasting below-trend economic growth through next year, which is consistent with the unemployment rate rising above 6 per cent.
Bassanese writes that it would take a ‘decent fall’ in the Australian dollar in the next few months to convince him, and probably the RBA, otherwise. He hints that if AUD/USD holds above 0.9000, the RBA will temporarily hold off but until it gets to the low 0.80s rates haven’t hit a bottom for sure.
