NAB bring forecast forward, now predict RBA cut in July
The NAB have changed their forecast for the next official interest rate cut, bringing it forward from August to July
"We do not see a need for the Board to wait," NAB economists said.
They cited RBA Governor Philip Lowe's recent speech at CEDA where he said we're not making any in roads.
“The most recent data – including the GDP and labour market data – do not suggest we are making any inroads into the economy’s spare capacity ... [and] it is not unrealistic to expect a further reduction in the cash rate as the Board seeks to wind back spare capacity ... and deliver inflation outcomes in line with the medium-term target.”
The NAB say they see a strong case for the Reserve Bank to do even more on policy and expect another cut to 0.75% in November.
"The Governor is still making the case that lower rates are directed at reducing spare capacity in the labour market rather than responding to deterioration in the economy," NAB said.
"We disagree, believing there is a more pressing need to deliver stimulus given the economy has lost some momentum and reflecting our weaker economic outlook.
"In brief, the RBA is behind the curve and needs to catch up quickly."
