Hi ULMM
You've presented a range of pretty compelling information on why the RBA should cut the cash rate.
So we seem to have
The arguments for a rate cut?
Otoh, the arguments against a rate cut?
Other factors / obsevations -
So you still think a cut is imminent?
You've presented a range of pretty compelling information on why the RBA should cut the cash rate.
So we seem to have
The arguments for a rate cut?
- Capex falling - never a good leading indicator
- With the CPI at 1.3% (and could well fall), no issue there with a bit of stimulus
- Real Gross Disposable Income negative
- Unemployment creeping up
Otoh, the arguments against a rate cut?
- Asset price bubbles and their further fueling by way of a rate cut (and what happens when / if they burst). Certainly the Secretary to the Treasury is concerned by this, and if he is I'd put money on the RBA being worried, even if the A/T and the PM aren't.
- If GFC Part II happens it would be nice to have some powder dry (above and beyond running the printing press or other form of QE).
Other factors / obsevations -
- Real GDP languishing, but not negative (?yet?).
- Questions over whether cutting rates will actually have the desired effect (particularly with regards Capex). And whether raising rates - as unlikely as that sounds - would have the effect of slowing the property market. My observation is that when people are confident they borrow - whatever the rate. Similarly when confidence is lacking, borrowing grinds to a near standstill - whatever the rate.
So you still think a cut is imminent?