National Australia Bank (NAB) chief executive Cameron Clyne says he expects the central bank to deliver more interest rate cuts.
“We’re likely to see another 50 basis points of cuts over the course of the year,” Mr Clyne told ABC Television’s Inside Business on Sunday.
The Reserve Bank of Australia (RBA) lowered the cash rate by 50 basis points to 3.75 per cent at its monthly board meeting on Tuesday, May 1.
RBA governor Glenn Stevens said in a statement accompanying the central bank decision the cut was based on information received over the past few months that suggested economic conditions had been somewhat weaker than expected, while inflation had moderated.
Mr Clyne said the “surprisingly good” jobs numbers that were published on May 10, “may temper when those cuts will come”.
The Australian Bureau of Statistics said the nation’s unemployment rate fell 0.2 percentage points to 4.9 per cent in April, while 15,500 jobs were added in the month.
Mr Clyne said the direction of house prices in the period ahead would be determined by the unemployment rate.
“We’re not seeing a precipitous decline at this point, absent potentially rising unemployment,” Mr Clyne said.
“If there is going to be a fall it’s going to be very moderate and the economy’s been able to absorb the house price declines to this point.
“But the reality is that house price decline does have an impact on consumer confidence.”
Asked if NAB would be able to continue to be market leading on price – NAB has the lowest standard variable mortgage rate among the big four banks – Mr Clyne said: “Absolutely.”
NAB, Australia’s third-largest lender, reported cash profit of $2.83 billion for the six months to March 31, 2012, up six per cent from the prior corresponding period.