Australian interest rates to be cut in May - Capital Economics

FXStreet (Bali) - Paul Dales, Chief Economist at Capital Economics, still expects that interest rates in Australia will be cut from 2.25% to 2.00% at May's meeting.

Key Quotes

"While we agree that the Reserve Bank of Australia (RBA) is right to conclude that monetary policy is less effective now than before the global financial crisis, we disagree with suggestions that this means there's little point in cutting interest rates further. Our view is that if your levers aren't working as well, then to get the same result you need to pull them more frequently and harder."

"We don't think that the RBA has given up on monetary policy altogether and we still expect that interest rates will be cut from 2.25% to 2.00% at May's meeting. That said, the recent stronger than expected employment and underlying inflation figures have made this less certain."