A private gauge of Australian consumer inflation slowed to a two-year trough in March while approvals to build new homes hit their lowest in almost three years, suggesting scope for a cut in interest rates in coming months if not this week. The Reserve Bank of Australia (RBA) holds its April policy meeting on Tuesday and while economists doubt it will cut the 4.25 percent cash rate this time, many do expect an easing to 4.0 percent come May.
"We cannot identify clear triggers for the RBA to recommend a rate cut tomorrow, as lower inflation, lingering global risks and contractionary fiscal policy are slow burn issues, not smoking guns," said Annette Beacher, head of Asia Pacific research at TD.
But she added: "We still lean towards two 25 basis-point rate cuts in the coming months, for a target of 3.75 percent." Financial markets largely agree, with interbank futures implying only a 30 percent probability of an easing this week, rising to almost 100 percent by May. Such a move would be a relief for the Labour government which is slumping in the polls but still set to deliver a tough budget on May 8, a week after the central bank's May policy meeting.
Comments
Comments are closed for this article.