The IMF today downgraded global growth 20bps to 3.3%yoy (lowest since GFC), and said that the risks are skewed to the downside.
Among Australia’s key trading partners, Chinese growth was bumped up 10bps to 6.3%yoy; Japanese growth -10bps to 1%yyo; and Indian growth -20bps to 7.3%yoy.
All told, I expect that this global growth downgrade will increase the pressure on the RBA to cut rates — a pressure which I think they’ll respond to at their 7 May meeting. They responded to the IMF’s downgrade in Jan by ditching their tightening bias — so they have form in this area.
We’ll get the next clue about this in the Deputy Gov Debelle speech, The State of the Economy, at the American Chamber of Commerce in Australia (AmCham) with Adelaide Business School event, at 1.40pm on 10 April.
I still think a rate cut at their 7 May meeting is likely.