Talk of an Reserve Bank of Australia interest rate cut in May is increasing
From the weekend press:
- Market pricing for a cut is increasing, currently around 30%
- May 3 (the date of the next RBA meeting) is the day the federal government hands down its budget - a rate cut on the same day would be politically sensitive
Despite the increase chatter I can't see it myself.
Reasons to cut cited centre of the strength of the AUD - a cut should make it less attractive and should prompt a fall. I don't think that's enough to prompt a cut in May.
(Background is low inflation, the bank certainly has 'scope' to cut on this front, and employment growth flattening after last year's huge job gains ... we've got an employmen report due Thursday this week, so that will be worth paying close attention to, a big drop in employment will make a cut a higher probability).
