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20 Apr 2015
May RBA rate cut becomes a closer call – JPM
FXStreet (Barcelona) - The Economic Research Team at JP Morgan, comments that the falling commodity prices and expected lower inflation might lead the RBA to cut rates in May, but the odds seem lowered for now.
Key Quotes
“This week’s data from Australia has complicated matters for the Reserve Bank, which meets in early May. In March, business confidence bounced alongside a surge in employment that pushed the unemployment rate lower.”
“…quarterly inflation report for 1Q15 likely will show inflation running 1%-pt below the RBA’s target zone, albeit driven principally by the fall in energy prices. Despite all this, the unemployment rate is still elevated, while the external backdrop has deteriorated.”
“Prices for iron ore (the largest export commodity) have tumbled, dragging down the terms of trade.”
“On balance, our forecast still calls for a final policy easing next month, but the balance of the news has lowered the odds.”
Key Quotes
“This week’s data from Australia has complicated matters for the Reserve Bank, which meets in early May. In March, business confidence bounced alongside a surge in employment that pushed the unemployment rate lower.”
“…quarterly inflation report for 1Q15 likely will show inflation running 1%-pt below the RBA’s target zone, albeit driven principally by the fall in energy prices. Despite all this, the unemployment rate is still elevated, while the external backdrop has deteriorated.”
“Prices for iron ore (the largest export commodity) have tumbled, dragging down the terms of trade.”
“On balance, our forecast still calls for a final policy easing next month, but the balance of the news has lowered the odds.”