5. December 2011 18:37
JP Morgan forecasted that the Reserve Bank will cut interest rates next month due to “material” deterioration in financial markets since the last board meeting. JP Morgan added that Australia’s central bank will cut interest rates in the country to 4.25% from 4.50% this coming December. 25 basis points cut interest rates that RBA have, it’s the first interest cut for more than two years because of the Melbourne Cup Day.
According to JP Morgan economist Stephen Walters, “The RBA boards showed its hand on Cup Day by choosing to case policy owing mainly to escalating global concerns our assessment is that officials will stick to this script in the near term, given that conditions in financial markets have deteriorated materially.” Starting December continuously next year, there could be deeper cuts in 2012 and forecasted that there will have twice cut interest rates next to 3.75%. The Reserve Bank has not been alone in cutting interest, some countries influenced the RBA to make the decision but among the economist who attended the meeting, they exactly focused the neutral level for the Reserve Bank’s benchmark 4 and 4.5 %.