Economists predict Australia’s central bank will cut cash rates

Australian economists have predicted that the Reserve Bank of Australia (RBA) could cut Australia’s cash rate by 50 basis points by next year.

UBS economists forecast that the RBA could cut the cash rate by the middle of next year, with the first cut in November.

Economists predict the cut could be due to several factors, including falling house prices and the slowing global economy.

UBS economists expect the RBA to again downgrade its Gross Domestic Product (GDP) outlook in May, saying if the RBA also move to an 'easing-bias' it would raise the risk of an August-cut over November.

UBS economists are not the only ones predicting a cut. One of Australia’s biggest banks has on Monday predicted two rate cuts this year.

Westpac predicts rate cuts in 2019

According to Westpac’s weekly economic report, the bank predicts the cash rate will be cut by 25 basis points in both August and November of this year.

Westpac says they expect the Reserve Bank to cut the cash rate by 25 basis points in both August and November this year.

‘We have revised down our GDP growth forecasts for 2019 and 2020 from 2.6% to 2.2%. With the slower growth profile, we now expect to see the unemployment rate lift to 5.5% by late 2019.

That makes a strong case for official rate cuts to cushion the downturn and, in turn, meet the RBA’s medium-term objectives.’ Westpac said.

Financial markets have fully priced for a 25-basis point rate cut by early next year, with many economists sharing the view. However, the vast majority believe the next move will be higher.

Most economists agree, that Australia’s Q4 Gross Domestic Product report, released on Wednesday, March 6 will be indicating of the RBA’s next move.

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