And then there were three: Goldman Sachs Group Inc., JPMorgan Chase & Co. and Macquarie Group Ltd. are sticking to bets the Reserve Bank of Australia will resume lowering interest rates as others ditch their rate-cut calls.
Australia has little fiscal room to cushion a downturn should the global economy retrench, said Stephen Walters of JPMorgan Chase & Co., the only economist to predict the nation’s first interest-rate increase in 2009.
Australia will cut spending on foreign aid, welfare and the public service and impose a tax on the highest paid as Prime Minister Tony Abbott uses his first budget to downsize government and set a path to surplus.
Treasurer Joe Hockey is aiming to spur A$125 billion ($117 billion) in infrastructure projects, support medical research and bolster the education export sector to aid Australia’s transition from mining-led growth.
Twice as many civil servants than mining workers were hired in Australia’s 10-year resources boom, enlarging the bureaucracy and inflating public spending. Cutting back is now a priority for a government seeking budget savings.
JPMorgan Chase & Co. and Westpac Banking Corp. pushed back their forecasts for when Australia’s central bank will lower interest rates, with the strongest inflation in two years offsetting rising joblessness.