VIEW: Westpac have "been surprised that the.....>

RBA: VIEW: Westpac have "been surprised that the RBA has retained its growth

forecast for '20 at 2.75% (around trend) given the weaker momentum apparent from

Q3 national accounts & developing questions around the global econ. It is also

somewhat brave, given a range of leading indicators around the labour market, to

assume that the recent surprise fall in the unemployment rate over the last two

months, from 5.3% to 5.1%, will be sustained. Westpac's forecast is for the

unemployment rate to drift upwards over H120. The uncertainty around the

coronavirus poses substantial risks to economic forecasts but certainly the

impact of the virus over the course of Q1 both globally & domestically has to be

quite damaging. It seems unlikely that subsequent stimulus policies will be able

to fully offset the short term damage done to confidence & activity implying a

realistic downward revision to growth forecasts, both globally & domestically.

Westpac continues to expect that a combination of a more moderate growth outlook

& an unexpected (by the RBA) deterioration in the labour market will require a

further policy response. Our forecast is that the next rate cut will occur in

Apr followed by a further cut in Aug."