25 Jul 2013
Flash: Will RBA ease in August? – NAB
FXstreet.com (New York) - Earlier this week in Australia, the Q2 CPI print was mixed leaving the market none the wiser as to whether the RBA will cut at the August meeting, notes the NAB Research Team.
Key quotes
“Our view is that the RBA will likely tweak up their inflation forecasts in the August MPS, taking Dec 13 forecast from 2.25% to 2.5%.”
“The outcome is not a trigger to cut in August but it does not prevent the RBA from cutting if they decide activity data suggests it is needed. This leaves us with a 60% probability of a 25bps rate cut at August.”
“As an aside, NAB released its quarterly SME business conditions survey today. Conditions in this sector have been weaker than the bigger firms for nearly four years. While conditions remain negative it is worth noting that for the first time in four years conditions are back above that of the larger firms.”
“Conditions strengthened across most industries suggesting lower interest rates and lower AUD may be helping.”
Key quotes
“Our view is that the RBA will likely tweak up their inflation forecasts in the August MPS, taking Dec 13 forecast from 2.25% to 2.5%.”
“The outcome is not a trigger to cut in August but it does not prevent the RBA from cutting if they decide activity data suggests it is needed. This leaves us with a 60% probability of a 25bps rate cut at August.”
“As an aside, NAB released its quarterly SME business conditions survey today. Conditions in this sector have been weaker than the bigger firms for nearly four years. While conditions remain negative it is worth noting that for the first time in four years conditions are back above that of the larger firms.”
“Conditions strengthened across most industries suggesting lower interest rates and lower AUD may be helping.”