Chatter about a rate cut on March 3
The RBA rate decision on Tuesday (late Monday in the US) is a cliff hangar, according to market probabilities. Australian cash rate futures imply a 47% chance of a cut and a 53% chance rates will be left unchanged.
On Saturday, Sydney Morning Herald editor Michael Pascoe wrote about 'why another interest rate is coming'. He focuses on the latest capex data.
"The neat thing about the capex survey is that it looks forward as well as counting the past. It's the forward bit that isn't as encouraging, showing non-mining investment momentum has been lost, that the confidence isn't there to invest more.
But he doesn't make any kind of forecast about when the cut is coming, just that it could come 'perhaps as soon as Tuesday'
Meanwhile, Westpac chief economist argues that the cut is coming next week.
"Developments since the February rate cut have strengthened the case for a cut in March," he said, citing jobs and capex data.
"The policy approach to ensure maximum easing in financial conditions would be to cut rates by 25bps and adopt an explicit easing bias. That bias might not need to be acted on but such a policy would ensure maximum downward pressure on the AUD."
Nothing yet from Ronald McCrannold on the RBA but in February he said it would be a shock if the RBA cuts again.
