Even though the economy may have contracted in the first quarter, the Reserve Bank of Australia left interest rates at 1.5% today and retained its optimistic view on the economic outlook. We suspect the RBA would be willing to look through a temporary fall in GDP, but it would find it harder to ignore two weak quarters in a row. While our central forecast is that interest rates will remain at 1.5% this year, the chances of a cut later in the year have increased somewhat.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services