Big differences in terminal RBA cash rate expectations

The latest Bloomberg survey highlights some pretty discordant views amongst market economists around terminal cash rate expectations. The interesting thing about this survey is that it includes forecasts out to the end of 2013, which is not something I would be personally comfortable providing! A few things are worthwhile highlighting. Five economists think the cash rate will fall another 75 to 100 basis points: 4Cast; Credit Suisse; Market Economics (Stephen Koukoulas); RBC; and Westpac's Bill Evans. Of this bunch, Koukie is the most bearish, and doubles-down by predicting a 50 basis point cut in August immediately followed by a 25 basis point cut in September, and a further 25 by end December (ie, another 100bps in total). Koukie also leaves his 2.5% cash rate constant until end December 2013. My own view is that if we have a global recession, the cash rate will go to 2% or less (this not my base-case, however). Only two forecasters see no further cuts: Ausbil Dexia and Barclays. And quite a number see the RBA increasing rates back to more normal levels by the end of next year. Westpac's Bill Evans has almost doubled-down too, predicting a further 75 basis points of cuts. An interesting year lies in wait.