The Reserve Bank board teases borrowers by extending hopes of a February rate cut, but will it arrive?
Michele Bullock had a spring in her step and stayed back for about 15 minutes after the presser ended to talk with a gaggle of journalists who had hung around.
Several others who had recently pushed their forecasts from February to May, such as AMP and Westpac, were hedging their bets back towards an earlier cut. "It could be quite difficult for the market sector to bounce back again at that point that non-market health and social care employment slows." Lags in the transmission of monetary policy through the economy mean the effects of a rate cut don't really start being felt for at least six months, and the full effect can take between a year and 18 months to occur.
Given the lags in monetary policy, that means you broadly want to have the cash rate back close to a neutral level — where it is neither boosting nor restraining the economy — by the end of next year to avoid undershooting the target.
Reserve Bank Michele Bullock Rates Rate Cut When Will Interest Rates Fall? Rate Forecasts RBA Board Governor Press Conference
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