Labour data pushes out the next rate cut

The futures markets continue to price in another interest rate cut to 2.50%, but after the promising Labour Force and unemployment data, it doesn’t look to be coming for a month or three yet.

We’ve also had several consecutive months of steadily increasing housing finance data, which suggests that the notion of falling dwelling prices was flawed, as a fair number of us had intimated all along.

Back on June 4, the RBA left the official cash rate in June unchanged at 2.75%

The next RBA Board Meeting and Official Cash Rate announcement will be on July 2 and 30 Day Interbank Cash Rate Futures July 2013 contracts are trading a shade above 97.3, which indicates only about a one-in-four expectation of an interest rate decrease to 2.50% at the next RBA Board meeting.

Given that the next round of CPI (inflation) data, isn’t due until July 24, I’d have to agree that August 6 looks to be a significantly more likely candidate for a rate cut than July does.

And by then, of course, we’ll all have a clearer picture on retail activity and more employment stats to digest.

Potential curve balls on the horizon – a bubble in China? Some concerning news stories doing the rounds…

 
 Source: ASX
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Pete Wargent

About

Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog


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