Economists change stance and bet on RBA rate cut

By Mozo ·

The futures market has reversed its position on the Reserve Bank of Australia’s official cash rate policy and is now expecting the rate to fall this year, it has been revealed.

A new market forecast sees the RBA cutting the rate from its current level of 4.5 per cent to a low point of 4.35 per cent though October, the AAP reported.

As the news provider noted, this is a considerable shift on the position taken on May 5th, the day after the RBA’s latest hike, when the futures market forecast a further hike to 4.75 per cent by September.

Such a reversal was explained by the growing unease over the global economic outlook, particularly with regard to debt-burdened Greece, but also by more general concerns over the state of the world’s advanced economies.

The AAP also pointed to the minutes of the RBA’s cash rate meeting in May which suggested the hike "would leave monetary policy well placed for the present".

Earlier this month, a study released by economic research firm BIS predicted that Australia’s population growth is set to slow over the next two years, thereby easing the upward pressure on interest rates.

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