HALISTER1: RBA May Hold as Budget, Policy Report, Election Loom: Analysis

RBA May Hold as Budget, Policy Report, Election Loom: Analysis

(Bloomberg) -- With last week’s poor CPI hanging over tomorrow’s RBA decision, the central bank may hold off rate cut to June, Bloomberg strategist Michael G. Wilson writes.
  • RBA will leave benchmark rate at 2.0% tomorrow, according to 15 of 27 economists surveyed by Bloomberg; decision due 2:30pm Sydney
  • Federal budget due later in the day; fiscal and budget deficit unknowns will then become clearer
    • With federal election expected on July 2, govt likely to use fiscal measures to spur growth
  • Friday’s statement of monetary policy to show RBA thinking on sustainability of iron-ore bounce, risks in global outlook, and provides opportunity to jawbone A$ lower
  • June may be more suitable time for rate cut; deferral to Aug. could risk further deterioration of domestic economy just before change of RBA governor
  • OIS pricing sees 58% chance of RBA cut tomorrow
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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