Strong recommendation to manage rate risk.
On March 17 we revised our forecast for the Reserve Bank's
cash rate.
We no longer expect that there will be 2 more rate cuts in this
cycle. We expect rates to remain on old until the second half of
2015. Essentially that means that for borrowers now is likely to be
as good as it gets.
In the note to customers, explaining our change of view we made
the following points :
"Our dominant theme in this cycle has been that a weak
labour market would undermine consumer spending which in turn
constrains investment, employment and incomes. Businesses react
negatively to soft demand; an uncertain global environment and a
"still high" AUD. Those forces are expected to be
complemented by a number of known headwinds - mining slowdown;
fiscal restraint; falling terms of trade and a resilient AUD as
global growth, including in the US, disappoints.
