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13 Aug 2013
Flash: RBA primed for late 2014 rate cut – Westpac
FXstreet.com (New York) - The RBA accompanied its August rate cut with an outlook that implied no urgency to cut again as soon as September, notes Global FX Strategist Sean Callow at Westpac.
Key quotes
However, “with economic growth persistently below trend as mining investment declines, further easing seems likely. Markets are fully priced for another -25bp by Feb 2014 (previously Nov/Dec). Westpac looks for a Q4 easing then one more in the cycle, in Q1 2014.”
Meanwhile, the Fed seems increasingly likely to commence its much-discussed “tapering” of the pace of QE from the 17-18 Sep FOMC meeting. After anticipation of such a move since Fed chairman Bernanke’s JEC testimony in May, it is debatable that USD will gain substantially on its confirmation. Dollar Index is only 1.5% weaker than a year ago when there was no QE (“Twist” was balance sheet neutral).
Key quotes
However, “with economic growth persistently below trend as mining investment declines, further easing seems likely. Markets are fully priced for another -25bp by Feb 2014 (previously Nov/Dec). Westpac looks for a Q4 easing then one more in the cycle, in Q1 2014.”
Meanwhile, the Fed seems increasingly likely to commence its much-discussed “tapering” of the pace of QE from the 17-18 Sep FOMC meeting. After anticipation of such a move since Fed chairman Bernanke’s JEC testimony in May, it is debatable that USD will gain substantially on its confirmation. Dollar Index is only 1.5% weaker than a year ago when there was no QE (“Twist” was balance sheet neutral).