Strong labour force data should delay RBA rate cut: Pete Wargent

Pete WargentJune 17, 2013

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 are on the horizon - a bubble in China? There are some concerning news stories doing the rounds...

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Source: ASX

Pete Wargent holds a range of finance and property qualifications and is the author of Get a Financial Grip – a simple plan for financial freedom.

Pete Wargent

Pete Wargent is the co-founder of BuyersBuyers.com.au, offering affordable homebuying assistance to all Australians, and a best-selling author and blogger.

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