Back
11 May 2015
RBA’s next move likely to be a hike – NAB
FXStreet (Barcelona) - Economists at National Australia Bank, believe that recent improvement in the Australian economy suggest that RBA will likely be on hold for some time and shift to a rate hike stance by late 2016.
Key Quotes
“Domestic forecasts are at 2.3% for 2014/15 and around 3% for 2015/16. The economy is still struggling to offset the impact of falling mining investment on domestic demand, while low commodity prices are also crunching income flows and government finances. Against that non-mining investment remains a disappointment.”
“Further falls in the AUD should help offset weakness in commodity prices. With ongoing growth in the out years expected to be around 3%, unemployment, after peaking at around 6.4% by end 2015, will remain elevated.”
“Inflation will remain subdued in the near term as domestic demand remains sluggish - with little real wage growth. Core inflation will be at the middle of the RBA’s target range by end 2015 and expected to remain within the target over the forecast period.”
“The RBA cut in May was always going to be a line ball decision and came a little earlier than we had expected. While there is still the risk of further cuts, recent improvements in the economy suggest the RBA will pause for some time, with the next likely move to be up (although the timing will be very data dependent). We currently expect the first hike to be very late in 2016.”
Key Quotes
“Domestic forecasts are at 2.3% for 2014/15 and around 3% for 2015/16. The economy is still struggling to offset the impact of falling mining investment on domestic demand, while low commodity prices are also crunching income flows and government finances. Against that non-mining investment remains a disappointment.”
“Further falls in the AUD should help offset weakness in commodity prices. With ongoing growth in the out years expected to be around 3%, unemployment, after peaking at around 6.4% by end 2015, will remain elevated.”
“Inflation will remain subdued in the near term as domestic demand remains sluggish - with little real wage growth. Core inflation will be at the middle of the RBA’s target range by end 2015 and expected to remain within the target over the forecast period.”
“The RBA cut in May was always going to be a line ball decision and came a little earlier than we had expected. While there is still the risk of further cuts, recent improvements in the economy suggest the RBA will pause for some time, with the next likely move to be up (although the timing will be very data dependent). We currently expect the first hike to be very late in 2016.”