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Credit Suisse: RBA needs to cut rates

According to analysts at Credit Suisse, Reserve Bank of Australia needs to cut rates below 2% in order to support the economy. The current economic conditions are poor: low business confidence, falling inflation expectations, rising unemployment rate. 

“Our model suggests that rates could fall to 1.5% over the next year”, Credit Suisse forecasts. “The RBA is reluctant to cut rates further from historically low levels given the risks to financial stability. It is prepared to pass off a moderate slowdown as statistical noise, making it difficult to forecast even 25 bps of cuts. However, the bank cannot ignore a sharper slowdown in growth and inflation”.

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