News and Media
3 February 2012
Recovery and growth tipped for retail, housing
Two further interest rate cuts over the coming months will be enough to kick start the struggling retail and housing sectors, according to HSBC chief economist Paul Bloxham.
The former Reserve Bank economist says the Australian economy is in a strong position, with the mining boom set to drive around 60% of GDP growth this year.
Reserve Bank Governor Glenn Stevens is widely tipped to lower rates to 4% on Tuesday, with a further 25-basis point cut to follow around mid-year.
Releasing HSBC's latest report on the Australian economy, Mr Bloxham said betting on futures markets - which suggest that rates will drop as low as 3.25% this year - was off target.
Even if the banks fail to pass on the full rate reductions to borrowers, HSBC expects the RBA to keep the cash rate on hold after cutting it to 3.75%.
Reproduced in part with permission: www.news.com.au, Recovery and growth tipped for retail, housing 2 February 2012.