Investing.com – The Australian Reserve Bank (RBA) is expected to cut interest rates at 25 basic points at its next monetary policy meeting on May 20, according to Westpac economists, who pointed out that the risks around inflation and global growth have decisively inclined to decisively down.
It is likely that the Central Bank of Australia now will reduce its 3.85%cash, citing weaker indicators of the domestic labor market, a salary growth less than expected and a growing global economic uncertainty, said Westpac chief economist, Luci Ellis, in a note.
The decision is expected to apply even if the inflation data of the first quarter are slightly above the expectations, Ellis said, while the RBA fights with the consequences of the climbing of US tariff tensions and the deceleration of the global demand.
“Although we do not expect the US administration to implement tariffs in the originally announced rates, there has already been damage,” he wrote.
“They assure it, there is no need to wait for the IPC,” said Westac, referring to the probable decision of the Board, while also indicating that the Central Bank could accelerate its path of flexibility if the conditions worsen even more.
“Maintain stable types against global turbulence and the weakest impulse in the labor market – for the good of 0.2 percentage points in inflation – it would be very difficult to explain,” Lucy added.
Westpac continues to forecast a total of three cuts this year, including movements in August and November.
Although a greater cut or a movement between meetings is considered unlikely, the risk balance is now inclined towards faster or more deep flexibility if the winds against global persist, Westpac added.
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