Westpac on the RBA: The case for even lower rates is strengthening

Comments from Westpac in response the decline in their leading index of the Australian economy

(data is here)

• Our current view is that rates will remain on hold throughout 2015 and 2016
• Today's Leading Index result adds to recent evidence of disappointing growth momentum and casts more doubt over prospects for a pick-up in 2016
• Recent comments from the RBA Governor confirm that the Bank has been disappointed by recent economic data, noting that 'the economy could do with some more demand growth over the next couple of years' and that the RBA remains 'open to the possibility of further policy easing'.
• The case for even lower rates is strengthening.
• That may see the RBA Board shift to an 'explicit easing bias' in coming meetings but this is unlikely to be acted on unless there is clear evidence that growth is likely to significantly undershoot the Bank's forecasts for 2016.

Comments from Matthew Hassan, Senior Economist

Bolding is mine