Shadow board not backing a rate day cut. Maybe later.
The Shadow Board, which gives its views ahead of the decision by the
Reserve Bank of Australia, sees little evidence for lower rates
on cup day. The Shadow Board is made up of influential
economists from the private sector and academia. They were asked to rank
their preferred outcomes for the cash rate.
Keeping the interest rate unchanged at 3.25 percent receives around 60
percent weight, considerably above the next most popular setting, a decrease
to 3.00 percent, with nearly 30 percent weight.
The Shadow Board sees evidence of weakening inflationary pressures medium
term. The most preferred setting for interest rates suggests a move
to 3.00 percent within
six months. But the risk that rates should be lower still is small, at around
There are conflicting view of the economy at the 12-month ahead horizon. Bob
Gregory and Saul Eslake back strongly rates in the range 2.50 to 2.75
a year from now.
Several Shadow Board members anticipate that the economy will likely require
rates above that level.