Last week’s data releases were positive with another solid month for business conditions and confidence numbers, as well as a rise in consumer sentiment (to a 12-month high). The latter was the second monthly rise in a row and more importantly, pushes the consumer sentiment index above the key 100 level, meaning that optimists now outnumber pessimists.
Despite the release of these good numbers, the market’s view on RBA interest rate movements has not changed much over the last month (refer chart below). While most economists see the next move in the official cash rate as up, the timing of that move differs greatly with some seeing a rate hike as soon as June next year and others seeing no move till 2019.
Financial market pricing still has one RBA rate increase now fully priced in by July/August next year.
Financial futures pricing of the RBA cash rate