RBA to cut rates and undertake QE in 2020 – AMP’s Oliver

Dr. Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital – Australia’s largest life insurer and huge fund manager, said that the Reserve Bank of Australia (RBA) is likely to extend its easy monetary policy in 2020, with both 25bps rate cut as well as Quantitative Easing on the cards.

Key Quotes:

“2020 is likely to see global growth pick up with monetary policy remaining easy. 

Expect the RBA to cut the cash rate to 0.25% and to undertake quantitative easing.

The main things to keep an eye on are: 

the trade wars; 

Iran tensions; 

the US election; 

global growth; 

Chinese growth; 

and fiscal versus monetary stimulus in Australia.”

Following the release of the RBA’s December meeting’s minutes, Oliver said: Overall the RBA's latest minutes are dovish. Feb is live for another easing and we think they will go again.”

So far this Tuesday’s trading, the AUD/USD pair is the main laggard, despite risk recovery, as weaker commodities’ prices, negative implications of the Australian bushfire on the economic growth and dovish RBA expectations weigh heavily on the AUD.

At the press time, the spot drops 0.34% to 0.6915, having hit fresh two-week lows at 0.6905 last minutes.