Rate cuts predicted
Experts suggest rate cuts are coming.
The Reserve Bank has slashed its economic expectations, with its forecast for growth over the year to June dropping from 2.5 to 1.7 per cent.
A modest rebound in growth is predicted by the end of this year, back up to 2.6 per cent - still nearly half-a-percentage-point down on the RBA’s forecast from just three months ago.
But the RBA uses market pricing to help set interest rates for its forecast. Markets are pricing two cuts this year.
Some say this means two rate cuts are a certainty, with the possibility of more.
“That's because, even with those two rate cuts, not only is the rebound in growth modest, but inflation will remain under the Reserve Bank's mandated 2-3 per cent target this year, and at the bottom of that range for at least the next two,” says finance journalist Michael Janda.