The Reserve Bank has changed its stance on interest rates and is now widely expected to cut the Official Cash Rate at least once or even twice this year, starting as soon as May 8.
Governor Adrian Orr changed the bank’s view on future interest rates from neutral to an easing bias last week, surprising some who had expected him to say again that the next move could be either up or down. Instead, he said global economic headwinds and poor business confidence meant the next move was more likely to be down.
Financial markets pushed wholesale interest rates lower and by this week were expecting a more than 50 percent chance of a 25 basis point cut next month, and one more later in 2019. That would drag the Official Cash Rate to 1.25 percent. Cuts are also now expected in Australia, where the housing market there is in free-fall and dragging on consumer spending.
Governor Adrian Orr changed the bank’s view on future interest rates from neutral to an easing bias last week, surprising some who had expected him to say again that the next move could be either up or down. Instead, he said global economic headwinds and poor business confidence meant the next move was more likely to be down.
Financial markets pushed wholesale interest rates lower and by this week were expecting a more than 50 percent chance of a 25 basis point cut next month, and one more later in 2019. That would drag the Official Cash Rate to 1.25 percent. Cuts are also now expected in Australia, where the housing market there is in free-fall and dragging on consumer spending.
