Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 6 May 2016

SOMP is "nothing short of spectacular"

Goodness me. 

The Reserve Bank's Statement on Monetary Policy (SOMP) for May 2016 has seen inflation forecasts slashed.

Inflation is expected to be in a range of just 1-2 per cent by the end of the year.

You can read about the detail of the quarterly inflation figures that has really got the Reserve Bank in tizz in my post here

Bill Evans of Westpac described the SOMP as "nothing short of spectacular", and he now forecasts another rate cut in August.

This paves the way for another interest rate cut by the August meeting to a cash rate of just 1.50 per cent (this outcome is now priced by futures markets as about a 3 in 4 chance), or possibly even a cut as soon as next month shouldn't be discounted.

Meanwhile Commonwealth Bank sees interest rates being cut to 1.25 per cent, and they have been more right than wrong on such matters in recent times. 

Hang on to your hats!

Source: RBA

It's an interesting dynamic, as growth in the economy is still expected to be quite solid.

Source: RBA

A huge and unexpected boost for housing market demand.