We hear from the analysts at ANZ Research who are not forecasting an Australian interest rate in 2013.
The Australian dollar has enjoyed a broad-based rally across the currency markets on Tuesday courtesy of a growing realisation that the Reserve Bank of Australia will extend a wait-and-see approach to interest rate rises.
Today’s Monetary Policy Decision text by the RBA was again almost identical to that released after the August and September Board meetings.
"Importantly, there was no upgrade to the Bank’s easing bias, which suggests a reduced likelihood of any further reduction in interest rates occurring before Christmas. ANZ has formally pushed its forecast for the final cut in this interest rate easing cycle out to February 2014, but assesses that we are broadly close to the bottom of this official interest rate cycle," says Ivan Colhoun at ANZ Research.
Despite having pushed back their expectations for an interest rate cut ANZ Research advise that they have not completely discounted a rate hike.
"ANZ continues to keep one further interest rate cut in its profile (now in February) believing that a continuing rise in the unemployment rate and the substantial drag from weaker mining investment keep open the option that the RBA takes out some further insurance (though it would be preferable if the AUD fell further instead).
"More broadly, ANZ believes that we are close to the low in the Australian cash rate cycle, given the improving housing sector, better global growth news and accommodative monetary policy.
"The wind-back in mining investment, however, is expected to see Australian interest rates remain at a relatively low level throughout 2014."