Australian Cash Rate as at 31 December 2015

What's your thoughts on the foreseeable (if indeed it is) future direction of the cash rate?

 

RBA Shadow Board (ANU initiative). (This was written before yesterday's announcement)

The Shadow Board’s confidence that the cash rate should remain at its current level of 2% equals 57% (down from 60% in June). The confidence that a rate cut is appropriate has increased from 2% in June to 8%; conversely, the confidence that a rate increase, to 2.25% or higher, is called for has decreased from 38% in June to 35%.

The probabilities at longer horizons are as follows: 6 months out, the estimated probability that the cash rate should remain at 2% equals 24% (23% in June). The estimated need for an interest rate increase lies at 69% (76% in June), while the need for a rate decrease is estimated at 6% (3% in June). A year out, the Shadow Board members’ confidence in a required cash rate increase equals 77% (down from 81% in June), in a required cash rate decrease 4% (2% in June) and in a required hold of the cash rate 19% (up from 17% in June).

 

Despite how the SMH headline reads - "Unemployment rate rises to 6%" - the figures were better than expected.

+1 arguments against a rate cut.

But time will tell.