Economists employed by the major banks, along with economists in general, have been steadily pushing their cash rate change forecasts out. The cash rate, the rate at which banks can borrow from and lend to each other in the overnight market, has not been raised since November 2010. It was reduced twelve times since then, beginning in October 2011 and as recently as August 2016.
A year ago, many were of the view the RBA would begin the rate increase as part of the cycle in 2018. As time passed and economic data failed to be of a type which would encourage official rate increases, dates began to be pushed back, initially in late 2018 and then into 2019.
NAB was the last of the major banks to materially change its cash rate forecasts. In May, NAB joined the other majors when it pushed back its timing for a 25bps rate rise from “late 2018” to 2019. After NAB made its change, none of the major banks forecasts a rate rise in 2018.
Westpac and its chief economist Bill Evans have been among the least “hawkish” of economists in the last year or two. For some time, he had expressed the view the data the RBA has seen would not give it the confidence needed to raise the cash rate. He acknowledged at some time those figures would come, but so far they had not and until they had, the RBA was likely to do little.