Just a 25% chance of another RBA rate cut: Citi

There is just 25% chance of a further rate cut by the Reserve Bank of Australia, according to Citi chief economist Paul Brennan.

He says an improved global economy will flow through to Australia and further cuts were unlikely, though things might chance once the RBA releases its views on September 17.

“In reality they are prepared to cut if they need to, but they probably feel as if they have time on their side,” Brennan told The Australian Financial Review.

He says the fundamentals are moving in the right direction but a pick-up in housing is slower than in previous cycles.

“In other cycles, interest rates were cut much more quickly. So you had a bigger shock effect.” Though he said auction rates have shot up.

“I think the August cut may have been a bit of a catalyst. And now the election is out of the way as well. Potentially the RBA strategy would be to wait…unemployment is drifting higher and they don’t want to get a run on.”

Alistair Walsh

Alistair Walsh

Deutsche Welle online reporter

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