Australian Markets Weekly: Six reasons the RBA should not cut rates
In this Weekly, we set out six reasons why the RBA should not cut rates. Before that, it’s worthwhile to review Friday’s US payrolls report that was one out of the box, softer than expected in almost all respects.
In this Weekly, we set out six reasons why the RBA should not cut rates:
1. The non-mining economy is improving.
2. Mining investment, business investment and commodity prices are not interest sensitive.
3. Still lower interest rates would boost the rate sensitive sectors of the economy and increase financial risks
4. Rates are already very low and the full impact of the cuts to 2% in H1 2015 is still to flow through.
5. The $A is now more clearly supporting growth.
6. The RBA only has 200bps of rate cuts left
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