Summary • The argument for another rate cut is clear

Summary
 The argument for another rate cut is clear;
 Which month is a tactical decision, but April is a live option;
 After the next cut, the RBA will sit back to see how the global economy and
movements in the $A develop.
Risks to key financial market variables.
Variable
Direction of risk
6 months
Cash rate
Comment
One down, and almost certainly one more to go in the
next couple of months. The chances of further rate
changes in the second half of the year will come down to
the outlook for the domestic unemployment rate and
global financial developments.
The level of ninety-day bill yields is pricing an almost
certain rate cut in the next couple of months.
Three-year swap rate is essentially pricing one more 25bp
rate cut this year, with a high chance of a second. No rate
hike is forecast over the next three years.
Longer-end rates have been impacted by both the pricing
of domestic rate cuts and global concerns about low
inflation. The first test of these low levels will be provided
by any imminent rate hike by the Federal Reserve.
The $A decline reflects lower commodity prices and
downgrades to Australian economic growth prospects.
We have brought forward our longer-term forecast of
0.73c to end-2015. The question for next year is whether
there might be a move under 70c.
90-day bank bills
3-year swap
5-year swap
AUD/USD
Key forecasts
Variable
Cash rate
90-day bank
bills
3-year swap
5-year swap
AUD/USD
Current
2.25%
2.23%
End Jun 2015
2.00%
2.20%
End Dec 2015
2.00%
2.30%
End Jun 2016
2.00%
2.50%
End Dec 2016
2.00%
2.75%
2.06%
2.36%
0.7730
2.00%
2.25%
0.77
2.30%
2.50%
0.73
2.50%
2.80%
0.70
2.80%
3.20%
0.70
Pricing as at 9am 30 March 2015
Economic and Financial Market Weekly Monday, 30 March 2015
Bank of Queensland Limited ABN 32 009 656 740 Australian Credit Licence Number 244616 (BOQ). BOQ will not provide you with advice in relation to the establishment,
operation and structure of your self managed superannuation fund (Super Fund). Nor will BOQ provide you with advice in relation to the investment strategy of your Super
Fund. You should seek independent advice from a qualified professional on these matters. Terms and conditions may apply to individual products and services. The
material in this presentation may contain general advice. This material has been prepared without taking account of your objectives, financial situation or needs. The
content of this presentation is for information only and is not an offer by Bank of Queensland Limited ABN 32 009 656 740 (BOQ) to provide any products and services.
BOQ makes no representations or warranties about the accuracy or completeness of the content contained in this presentation. BOQ recommends that you do not rely on
the contents of the presentation, that you consider the appropriateness of any advice before acting on it and that you obtain independent professional advice about your
particular circumstances. You should obtain and consider the relevant terms and conditions or Product Disclosure Statement (PDS) before making any decision about
whether to acquire or continue to hold any products. All other terms and conditions or PDS and Financial Services Guide (FSG) are available at any BOQ branch.
1
Key economic charts of last week
There has been some slowing in population growth,
although it still remains high by historical standards.
The number of arrivals has slowed a little over the past
twelve months.
The proportion of the population moving inter-state is
around the lowest in over 30 years.
There has been a sharp slowing in WA population growth
and (to less extent) Queensland.
Housing and superannuation dominate household asset
holdings.
Australian interest rates are low by its own historical
standard, but not when measured against global yields.
Richard Fisher Quotes
There is many a joke about economists (supposed) lack of personality. And some of it is even true! But the ex-US central
banker, Richard Fisher, was a little different. Below is some of his more memorable quotes.
Ahead of a speech at Harvard in 2009, he described asking his wife if she had ever imagined in her “wildest dreams” that he would be
speaking there. He said she replied, “I hate to let you down, Richard, but after 35 years of marriage, you rarely appear in my wildest
dreams.”
Talking about the US economic outlook at end-2013, “I used to say that the United States was the best-looking horse in the global glue
factory. Now, I firmly believe we are the most fit stallion or filly on the global racetrack.”
"Monetary policy acts with a lag. I liken it to a good single malt whiskey or perhaps truly great tequila: It takes time before you feel its full
effect.”
Economic and Financial Market Weekly Monday, 30 March 2015
Bank of Queensland Limited ABN 32 009 656 740 Australian Credit Licence Number 244616 (BOQ). BOQ will not provide you with advice in relation to the establishment,
operation and structure of your self managed superannuation fund (Super Fund). Nor will BOQ provide you with advice in relation to the investment strategy of your Super
Fund. You should seek independent advice from a qualified professional on these matters. Terms and conditions may apply to individual products and services. The
material in this presentation may contain general advice. This material has been prepared without taking account of your objectives, financial situation or needs. The
content of this presentation is for information only and is not an offer by Bank of Queensland Limited ABN 32 009 656 740 (BOQ) to provide any products and services.
BOQ makes no representations or warranties about the accuracy or completeness of the content contained in this presentation. BOQ recommends that you do not rely on
the contents of the presentation, that you consider the appropriateness of any advice before acting on it and that you obtain independent professional advice about your
particular circumstances. You should obtain and consider the relevant terms and conditions or Product Disclosure Statement (PDS) before making any decision about
whether to acquire or continue to hold any products. All other terms and conditions or PDS and Financial Services Guide (FSG) are available at any BOQ branch.
2
Contact List
Economic and Market Analysis
NSW
Peter Munckton
0439 310 837
peter.munckton@boq.com.au
Liam Jeffrey
Jimmy MuirMcCarey
David Abbott
07 3212 3865
liam.jeffrey@boq.com.au
07 3212 3117
james.muir-mccarey@boq.com.au
07 3212 3049
david.abbott@boq.com.au
NSW
Mark Cozens
0402 853 202
mark.cozens@boq.com.au
VIC
Nigel Hodgson
0416 180 087
nigel.hodgson@boq.com.au
Dale Streten
0419 021 963
dale.streten@boq.com.au
Steve Klinakis
0417 658 348
steve.klinakis@boq.com.au
NSW
Lloyd Guy
0467 798 132
lloyd.guy@boq.com.au
VIC
Ray Buxton
0427 049 430
ray.buxton@boq.com.au
WA
Andrew Opie
0481 008 924
andrew.opie@boq.com.au
QLD
Mark Sydes
0419 702 569
mark.sydes@boq.com.au
NSW
Simon Davis
0481 438 212
simon.davis@boq.com.au
VIC
Darryn Cahill
0411 080 985
darryn.cahill@boq.com.au
WA
Michael Storer
0438 456 834
michael.storer@boq.com.au
Tim Pryor
Gerard (Ged)
Thom
0407 754 535
tim.pryor@boq.com.au
0477 341 424
gerard.thom@boq.com.au
Leo Hawker
0418 228 071
leo.hawker@boq.com.au
07 3212 3510
warren.bobbermien@boq.com.au
02 8222 8332
glenn.hilleard@boq.com.au
0412 985 837
louis.deklerk@boq.com.au
0414 843 225
mark.bartholomeusz@boq.com.au
Financial Markets
QLD / WA
Trade Finance
QLD
Corporate Banking
Agribusiness
QLD
Business Banking
QLD
Property
NSW
Warren
Bobbermien
Glenn Hilleard
WA
Louis de Klerk
QLD
Private Bank
Mark
Bartholomeusz
Equipment and debtor finance
QLD
Qld
Brendan Casey
0419 755 031
brendan.casey@boq.com.au
NSW & Vic
Nic Stoneham
0422 157 781
nicholas.stoneham@boq.com.au
Economic and Financial Market Weekly Monday, 30 March 2015
Bank of Queensland Limited ABN 32 009 656 740 Australian Credit Licence Number 244616 (BOQ). BOQ will not provide you with advice in relation to the establishment,
operation and structure of your self managed superannuation fund (Super Fund). Nor will BOQ provide you with advice in relation to the investment strategy of your Super
Fund. You should seek independent advice from a qualified professional on these matters. Terms and conditions may apply to individual products and services. The
material in this presentation may contain general advice. This material has been prepared without taking account of your objectives, financial situation or needs. The
content of this presentation is for information only and is not an offer by Bank of Queensland Limited ABN 32 009 656 740 (BOQ) to provide any products and services.
BOQ makes no representations or warranties about the accuracy or completeness of the content contained in this presentation. BOQ recommends that you do not rely on
the contents of the presentation, that you consider the appropriateness of any advice before acting on it and that you obtain independent professional advice about your
particular circumstances. You should obtain and consider the relevant terms and conditions or Product Disclosure Statement (PDS) before making any decision about
whether to acquire or continue to hold any products. All other terms and conditions or PDS and Financial Services Guide (FSG) are available at any BOQ branch.
3