China concerns unlikely to prompt action

Concerns over the health of China’s economy and the fall in domestic equity prices are unlikely to prompt the Reserve Bank of Australia (RBA) to cut interest rates from 2.0% at the meeting on Tuesday 6th October. That said, over the coming months we expect it will become clear that the RBA’s current GDP growth forecast for 2016 is too optimistic. As such, we are sticking with our long-held view that interest rates will eventually fall to 1.5%, with cuts coming come back onto the agenda either late this year or early next year.