At a lunchtime event at Tattersall’s Club in Brisbane yesterday, after he predicted another interest rate cut this year in either June or August, Dr Chris Caton, BT’s Chief Economist, noted that “Interest rate changes are like cockroaches.” That is, “There’s usually another one around somewhere.” This is a rule-of-thumb for Australian market economists, and AMP’s Shane Oliver said the same thing last week (see this ABC News Report). Queensland’s own Michael Knox, Chief Economist of Morgans, also predicted another rate cut this year at his ESA Qld lunchtime briefing last week, based on Australia’s unemployment rate (currently 5.7%) remaining above the natural rate of unemployment (which Michael must think is around 5% or lower).
So another rate cut is likely this year, possibly as early as next month, but more likely in August, after the June quarter CPI figures are out and the Bank can gauge whether inflation is remaining abnormally low and whether Australia is truly at risk of deflation, which I doubt, even though deflation has, surprisingly, become a new topic for discussion at dinner parties and social gatherings.
To gain insights into the economic outlook, so you might assess the prospects for future interest rate movements, there would undoubtedly be no one better to hear from than a senior official from the RBA. The Economic Society of Australia (Qld), of which I am the Secretary, is privileged to be hosting a business lunch on Thursday 16 June at the Hilton, Brisbane, featuring RBA Deputy Governor Philip Lowe, who will take over as Governor from Glenn Stevens on 18 September (see the Treasurer’s media release). In Brisbane, the Deputy Governor will speak on “Recent developments in the Australian and global economies”, which no doubt will be of interest to us all. You can find out further details and register for the lunch via the ESA Qld website:
I hope to see you there.
RBA Deputy Governor Philip Lowe, the Bank’s next Governor