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‘Ultra-bland’ RBA stays the course

Central bank's words don't reflect the dramatic slowdown

Jack Derwin

Digital Journalist, Your Money

The Reserve Bank of Australia (RBA) again left the official cash rate at its historic low of 1.5 per cent on Tuesday.

Read: What is the RBA and how does it decide interest rates?

It marked the 28th consecutive meeting at which the central bank left the interest rate on hold, despite a growing number of economists calling for it to be cut.

One of those is AMP chief economist Shane Oliver who is forecasting two rate cuts this year despite the RBA’s tendency to remain optimistic and insistence that inflation remains “low and stable”.

“You might be given the impression that they’re upbeat about things, that a rate hike is around the corner,” Oliver told Trading Day. 

“I didn’t see a lot of changes in this statement. It was relatively boring after the speech of [governor] Philip Lowe and the statement on monetary policy.”

With another speech due by Lowe to coincide with the official GDP figures on Wednesday, economists will be listening for signs of a softening stance.

“What he says tomorrow can expand a lot more on the risks that we saw in today’s statement which seemed ultra-bland,” Oliver explained.

“The Aussie economy to me looks to have slowed down quite dramatically since the last half of last year.”

As that starts to become more clear as weak economic data is published, the RBA may have no choice but to start talking about further cuts.

Read: Should the RBA raise or cut interest rates?

While Oliver’s forecast was for one cut each in August and November this year, that could come earlier still.

“Whatever it is, at some point in the next few months they’ll be cutting interest rates.”

Watch the full interview above.

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