RBA: Markets price only a 15% chance of a cut by May 2017 - Westpac

Sean Callow, Research Analyst at Westpac, suggests that the markets price only a 15% chance of a RBA cut by May 2017 while the Westpac expects the cash rate to be kept at 1.5% throughout 2017.

Key Quotes

“The RBA held the cash rate at 1.5% in November and maintained a neutral outlook in its statement.”

“The RBA said its “forecasts for output growth and inflation are little changed from those of three months ago. Over the next year, the economy is forecast to grow at close to its potential rate, before gradually strengthening. Inflation is expected to pick up gradually over the next two years.”

“Westpac expects that the “somewhat mixed” labour market – rather than inflation - will be key to whether there is any further easing in 2017.”