Economics
Stevens Rate `Chill Out' Rattled as Australia Easing Case Builds
- Iron ore falls to six-year low, business investment slumps
- Traders see a 50 percent chance of a rate cut in 2016
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Just as it seemed Glenn Stevens’s case for stable Australian interest rates was building, along came a fresh slump in iron ore, a drop in business investment and a currency rally.
The Reserve Bank of Australia governor said last week traders should “chill out” until February, when policy makers will look at the data again. The data, last week at least, would argue for an easing. While swap markets are pricing in a negligible chance of the central bank board cutting its record-low 2 percent benchmark at Tuesday’s meeting, the first half of 2016 remains in play with a 50 percent chance of a reduction.