According to ChainCatcher, UBS has brought forward its forecast for the Reserve Bank of Australia's first rate cut from May next year to February, and said that the downward effect of the Federal Reserve's consistent rate cuts over the next year will also provide the Reserve Bank of Australia with room to relax.
UBS chief economist George Tharenou said Australian interest rates will remain higher for longer, at least relative to global trends, which are becoming increasingly dovish. UBS now expects terminal rates in the United States to be lower, with the federal funds rate falling quickly to levels well below the RBA's official cash rate. He said these factors mean the RBA may start easing monetary policy sooner.
