2 reasons the Reserve Bank of Australia is unlikely to cut in June

Author: Eamonn Sheridan | Category: Central Banks

Danske Bank say that Governor Lowe's speech (due Tuesday 21 Mat at 0310GMT) 'will be very important for the RBA outlook'.

  • green shoots narrative is shot to pieces
  • Markets (and almost all analysts) now expect RBA to cut in June, but didn't RBA leave it up to the unemployment rate to decide whether a cut was warranted or not? In such case rising unemployment is probably needed before RBA acts. Rising unemployment is likely also on the cards …  but not before the June meeting. 
  • Will the Phillips Curve apologists strike again and postpone the cut until further evidence is gathered? We tend to think so 
  • Morrisons surprise (or even miracle) victory in the election is another reason for RBA to wait and see, as his alleged tax cuts could come in handy for the Australian economic momentum. 
(The two reasons are my highlighting above).

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