Citi forecast an RBA rate cut in August

Author: Eamonn Sheridan | Category: Central Banks

Following the plunge in the 'employment' component of the NAB business survey, and ahead of today's jobs data, Citi on the Reserve Bank of Australia  

And, for today, due at 0130GMT:
OK, on to Citi:
  • NAB business confidence in April is flat and the lowest reading in over 4 years though some of the weakness may be related to pre-election uncertainty (Federal election is held this Saturday).  
  • Most importantly though for the RBA, employment conditions are negative for the first time since August 2015. 
And what it means for the RBA:
  • the last time business confidence was at this level, the RBA cut the cash rate by 25bps.
  • this data on its own is unlikely to promote policy action
  • RBA will want to see what happens to the unemployment rate
  • there is the prospect of post-election fiscal stimulus worth around ¾pp of GDP
  • expect the RBA to cur in August, 25bps

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