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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

We haven’t had to play the “Will they? Won’t they?” guessing game with the RBA for some time.

The last change to monetary policy by the RBA was back in August 2016. However, last week’s unexpectedly low CPI data for the March quarter has encouraged the market to move in the direction of rate cuts with some predicting an RBA move this week.

The market initially moved to price close to 70% chance of a May rate cut but by the end of the month this had been lowered to 45%. A full rate cut is priced by July and financial futures still have a cash rate at almost 1% (two rate cuts) by next year.

Futures Market Pricing Cash Rate pricing over next 12 months

For the record, I am in the minority and not predicting a rate cut this week because the labour market remains in good shape, but acknowledge there is a good chance that the RBA adopts an explicit easing bias in their commentary going forward.

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Source: Rural Bank


Disclaimer: Whilst all care has been taken in compiling the information, the information should not be relied upon as substitute for professional advice where necessary. Rural Bank accepts no responsibility for the accuracy, completeness or timeliness of the information and disclaims all liability in relation to any loss or damage suffered by the use of or reliance upon any information contained herein or in any attachment or annexure hereto by any person. Rural Bank – A Division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879