Stephen Koukoulas has reiterated his prediction of a 3.5% RBA cash rate by June this year--which I have consistently disagreed with since late last year--in a blog post a few days ago, and thinks the RBA will start with a 25 basis point cut in April:
"[T]here probably should be AT LEAST another 50 basis points of rate cuts sooner rather than later as the mining and resources boom does not provide enough impetus to offset the general weakness elsewhere.
The RBA knows too well that fiscal policy will unambiguously be restrictive, the AUD is over-valued and therefore acting as a hand break on the economy and that interest rates are at best, neutral.
While the RBA clearly should have cut in February and/or March, all is not lost. The next RBA Board meeting is 3 weeks away and it can catch up then with a 25 point cut.
More rate cuts after that will be likely as it sees low inflation, a tick up in unemployment and weaker Chinese growth all coming through. It is still on track to cut to 3.5% - in the next few months which should help to support growth and help prick the AUD bubble."
