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Modi, AMLO Top Major Economy Leader Poll, Macron Last


Under Pressure


Trend Condition Remains Bearish

RBA: VIEW: NAB now believe that "the RBA will stay on hold in February, using
the recent improvement in the unemployment rate to buy time - suggesting the
bank will continue to react to the accumulation of evidence very gradually. It
is important to note that the framework for monetary policy still suggests that
rates should be lower. Inflationary pressure remains weak and recent headwinds -
particularly for consumption and business investment - are likely to persist.
Notwithstanding the recent dip in the unemployment rate, a large degree of spare
capacity remains in the labour market with little progress having been made over
the last year in reducing unemployment. Nonetheless, unless the RBA wishes to
move against market expectations, the February cut appears off the table.
Consequently, we have moved the timing of the next cut to April followed by a
second cut around mid-year. Beyond that the risk of a move to 'unconventional'
policy in H2 2020 will depend critically on whether the labour market
deteriorates more significantly than we forecast. By April, the RBA will have
confirmation of another quarter of weak consumer spending with further evidence
that interest rate and tax cuts to date have not done enough to boost spending."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |