MNI RBA Cash Rate Forecast;Macquarie Pushes Hike To Early 2020

By Sophia Rodrigues

     SYDNEY (MNI) - Macquarie Securities economist Justin Fabo has joined the

growing number of economists pushing back their forecast for the first hike in

the Reserve Bank of Australia's cash rate in this cycle.

     Fabo now expects the RBA to hike in early 2020 compared with previous

forecast for a hike in February 2019.

     While Fabo thinks the timing risks are evenly balanced, he also thinks

"there is a small but growing risk that the RBA never gets going if our view

that a more 'interesting' global economy by 2020 turns out to be more than

prescient."

     The key reason for change of view is the the economy won't improve fast

enough for the unemployment rate to have a "4" in front of it which means ample

spare capacity in the economy is likely to linger. 

     Falling housing prices and uncertainty about the outlook for housing

activity and credit availability also gives the RBA reason to sit pat, he wrote

in a note Wednesday. "Developments in global interest rates also seem unlikely

to drag the RBA out of hibernation soon."

     On Tuesday, economists at ANZ also pushed back their forecast, now

expecting the first hike in August 2019 compared with May 2019 forecast earlier.

Their view is based mainly on a weaker-than-expected house price outlook.

     Below is a table of forecasts for the next RBA cash rate decision on July 3

and the outlook for the cash rate. The cash rate is currently at 1.5%.

                      July 3                             Outlook

----------------------------------------------------------------

NAB                     Hold             25bps hike in May 2019.

ANZ                     Hold              25bps hike in Aug 2019

Westpac                 Hold                     Hold 2018, 2019

CBA                     Hold                 25bps hike Feb 2019

Goldman Sachs           Hold                   25bps hike in Nov

Citigroup               Hold               25bps hike in Q1 2019

JP Morgan               Hold         Hold for foreseeable future

HSBC                    Hold               25bps hike in Q2 2019

TD Securities           Hold         25bps hike in May, Nov 2019

UBS                     Hold                     Hike in 2H 2019

Deutsche Bank           Hold       2 hikes each in 2H 2019, 2020

AMP Capital             Hold               Hike sometime in 2020

Moody's                 Hold  Hold through 2018; Hike early 2019

St. George              Hold               25bps hike in Q1 2019

Macquarie Securities    Hold            25bps hike in early 2020

Nomura                  Hold         25bps hike in Feb, Aug 2019

RBC Capital             Hold               25bps hike in Q1 2019

BankAm-ML               Hold               25bp hike in May 2019

Morgan Stanley          Hold                  Hold until Q3 2019

Standard Chartered      Hold                        Hold in 2018

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

[TOPICS: MTABLE,MMLRB$,M$A$$$,M$L$$$,MT$$$$]