On Friday the IMF published it Article IV consultation report on Australia
They recommended the Reserve Bank of Australia keep monetary policy easy
Local Australia press have elaborated further on the report, in very brief (bolding mine):
IMF much more pessimistic on economic outlook than the RBA
- IMF says RBA should halve its policy rate over the next six months to 0.75 per cent
- Aim to avoid ... the economy getting stuck in a low inflation and low-growth trap
Contrasts with the RBA's Governor Lowe, who said last week
- global economy picking up speed
- "the days of further monetary easing are behind us"
- central forecast was for sustained growth of about 3 per cent over the next few years
IMF argues the current RBA cash rate is much less stimulatory than it appears
- the "equilibrium interest rate" - the rate at which economic activity is neither being stimulated nor restrained - has halved from 2 percentage points above inflation to 1 percentage point since the onset of the global financial crisis
Article is here at The Australian, may be gated
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The Reserve Bank of Australia is not going to cut the cash rate to 0.75% in the next 6 months. Not gonna happen regardless of what the IMF recommend.
Having said that, risks do exist for a lower rate in Australia, the RBA will be watching incoming data, both in Australia and China, and will also be cognizant of political risks (mainly US, although the backtracking last week that continued over the weekend has calmed markets somewhat).
For the moment, RBA well on hold as the data and politics are tending stable.
