The RBA may have been right all along on late rate cuts
Economists are waiting on fresh inflation figures next week but are already pushing back expectations on when the Reserve Bank will start to cut rates.
Michele Bullock is close to pulling off the economic equivalent of a royal flush. She has stared down both concerns that the Reserve Bank is risking economic damage by keeping rates too high for too long and criticisms that the November rate rise was unnecessary.
And now it seems she, along with the RBA board, may have been right to have put on their best poker faces and sit on their hands.
Because while many economists are waiting on inflation figures next week to firm up their forecasts for interest rates this year, some have already pushed back their expectations for when rate cuts will begin. And it’s little to do with what’s going on in the US.
AMP has been anticipating a mid-year rate cut for some time. But deputy chief economist Diana Mousina is now suggesting there’s a high risk the first cut comes later in the second half of the year on the back of data showing the jobless rate has edged up but slower than anticipated.
