Forex Flash: It has become clear the RBA will need to cut rates further - NAB
FXstreet.com (Barcelona) - Today's monthly data releases again showed an economy that is losing momentum, says NAB senior economist Spiros Papadopoulos. Retail sales were weak, house prices flat, ANZ job ads slid by 2.9% and the AiG Manufacturing PMI fell to 43.6. "RBA is expected to cut tomorrow. Markets are pricing in an 89% chance of a cut" Spiros notes.
Mr. Papadopoulos elaborates further: "It has become clear that the RBA will need to cut the cash rate further. While the RBA expressed some optimism in November that the rate cuts over the past year were starting to impact positively through the economy, the data over the past few days is likely to lead to a different assessment tomorrow. Despite the higher than expected Q3 CPI, which held the RBA back in November, the central bank's focus must now be on supporting activity, not fearing inflation."
Mr. Papadopoulos elaborates further: "It has become clear that the RBA will need to cut the cash rate further. While the RBA expressed some optimism in November that the rate cuts over the past year were starting to impact positively through the economy, the data over the past few days is likely to lead to a different assessment tomorrow. Despite the higher than expected Q3 CPI, which held the RBA back in November, the central bank's focus must now be on supporting activity, not fearing inflation."
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