Goldman Sachs Australia has joined the roster of industry watchers who think an interest rate cut may be set for 2015.
This is contrary to the recent forecasts of many market economists who believe a tightening in monetary policy, which in turn would create a small rise in rates, will be imposed sometime late in 2015.
Goldman Sachs stands alongside the analysis of Deutsche Bank as it expects the RBA to cut rates next year by as much as 0.5 percentage points in two moves, Business Insider Australia reported.
The report said it based the call on the deterioration in employment and declining activity in housing across the country.
The predicted interest rate cut could materialise in the first half of 2015, in about March by 0.25% and again in August by 0.25%. These possible moves may lower the cash rate to 2%, the same level forecast by Goldman Sachs.
“We expect the RBA will leave interest rates unchanged until 2Q 2016 when we expect the RBA to commence a tentative tightening cycle,” Goldman Sachs says.
Business Insider said Australia’s interest rates have reached their lowest level in 60 years, and the RBA hasn’t moved them for 15 months in a row.