The Australian’s Uren writes that the RBA is unlikely to cut rates despite the recent run of softer data. This is basically the same as my view.
The financial markets’ confident prediction of a rate cut at tomorrow’s Reserve Bank board meeting is unlikely to be fulfilled.
Although the latest data has been weak both in Australia and overseas, the Reserve Bank still believes its rate cuts of the past year are working their way through the economy, while its staff would have spent last week debating whether they should raise, not lower, their growth forecast.
With a cash rate of 3 per cent, the Reserve Bank believes it has rates at a clearly stimulatory setting. A cut now would look like fine-tuning monetary policy settings in response to ambiguous data.