Economists scrambling to joint the rate cut prediction bandwagon

Recently when comparison website surveyed 37 financial experts, just three of them predicted that the official cash rate would fall further in 2015.

Now, another five have joined them to make it eight, as it is looking increasingly likely that the next move in interest rates will be down instead of up. 

The three economists who are now looking like financial geniuses were Andrew Wilson, Stephen Koukoulas and David Scutt. 

Jumping on their bandwagon today was a quintet of finance experts that included Bill Evans from Westpac and the Barefoot Investor Scott Pape. 

Mr Evans, chief economist at Westpac, is forecasting that the RBA will cut interest rates in both February and March, bringing rates down to 2 per cent or lower. 

Shane Oliver from AMP Capital told The Adviser that the RBA would be concerned about commodity prices having fallen so quickly while the Australian dollar hasn’t fallen enough. At the same time, non-mining sector growth remains relatively sluggish. 

“As a result, it’s become increasingly clear that more monetary easing is required in the form of a further significant fall in the Australian dollar and lower interest rates,” Mr Oliver said. 

“Without the latter, the Australian dollar may not fall enough. Fortunately, low inflation and a loss of momentum in house prices provide the Reserve Bank with plenty of flexibility.”


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