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Goldman Sachs: RBA will cut in 2015

Goldman Sachs forecasts RBA to turn dovish in the coming months. The bank has revised its forecasts for the RBA monetary policy and is now expecting a 25 bps rate cut in March 2015 followed by another one in August 2015.

"We now expect the RBA to ease interest rates in March 2015 by 25bps and August by 25bps taking the cash rate to 2.0%. We expect the RBA will leave interest rates unchanged until Q2 2016 when we expect the RBA to commence a tentative tightening cycle. Our AUD view of 0.8200 on a 12-month view may look too optimistic relative to the change in our interest rate forecast, however, much will depend on the outlook for capital flows and commodity prices into early 2015 and a case can be made that the AUD will encounter more resistance as it approaches 0.8000".

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