Official Cash Rate & Future Direction of Interest Rates – April 2019

The below graph plots the Implied Forward Interest Rate yield curve (blue line), and the Interest Rate Swap yield curve (red line).


The yield curve is interpreted as follows –

(i) Short Term (less than 6 months) – the Reserve Bank to cut the official interest rate by 0.25%.

(ii) Medium Term (12 months) – interest rates to be steady.

(iii) Long Term (3 years) – interest rates to rise by 1% to 2.25% than to keep on increasing to 2.75%.