Citi joins Australia's major banks predicting October cash rate cut

Cornelia Mascio
Settembre 21, 2019

National Australia Bank economists on Friday became the latest to join a growing pool of analysts predicting a third interest rate cut by the country's central bank in October, citing slowing economic growth and a smaller chance of fiscal support.

NAB analysts on Friday revised their initial forecasts of cuts in November and February to October and December, predicting the cash rate - now at a record low of 1.0 per cent - would be slashed further to 0.5 per cent by the end of the year.

An October cut would follow two back-to-back cuts in June and July to 1%.

NAB have also brought forward their next rate cut to December, which would bring the official cash rate down to 0.5 per cent.

The big four Australian banks are now expecting an RBA rate cut on October 1, with the National Bank of Australia (NAB) joining Westpac, Australia New Zealand Bank and Commonwealth Bank in that regard.

With CBA and NAB's revision, the "big four" Australian banks including Westpac and ANZ are all predicting a cut in October.

Also on Thursday, Australia's centre-right government announced the budget was in balance for the first time in 11 years and a surplus next year was all but certain.

"While strong public-sector spending has been a significant support to growth over the past year, as have exports of commodities, this pattern of growth suggests unemployment is likely to edge higher", Spence and Davies said.

Williamson said "early evidence" indicated that household saving would continue to oustrip spending amid ongoing low wages growth, rising income taxes and falling consumer sentiment.

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