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31 Mar 2015
Australian rates & FX year-end forecast – Capital Economics
FXStreet (Barcelona) - Australian rates might fall down to 1.50% and AUD/USD might weaken to 0.70 by year-end, forecasts Paul Dales, Chief Australia & New Zealand Economist at Capital Economics.
Key Quotes
“We think the odds just about favour the RBA announcing at Tuesday’s meeting a 0.25% cut in rates to 2.0%. That would take the official cash rate down to a new record low, but we doubt that 2.0% will mark the trough of the cycle.”
“If we are right in expecting a sharper and longer slowdown in GDP growth than the RBA, then policy will be loosened even further. Our view that interest rates will be reduced to 1.5% by the end of the year is consistent with the Australian dollar weakening to around US$0.70."
Key Quotes
“We think the odds just about favour the RBA announcing at Tuesday’s meeting a 0.25% cut in rates to 2.0%. That would take the official cash rate down to a new record low, but we doubt that 2.0% will mark the trough of the cycle.”
“If we are right in expecting a sharper and longer slowdown in GDP growth than the RBA, then policy will be loosened even further. Our view that interest rates will be reduced to 1.5% by the end of the year is consistent with the Australian dollar weakening to around US$0.70."