From the FXWW Chatroom: Last week’s surprisingly low first-quarter inflation release has fuelled speculation that the Reserve Bank of Australia will this week cut the cash rate for the first time in a year.
Such easing, if it materialised, would, in turn, put the country’s lenders under pressure to pass on the cut to borrowers, particularly mortgage-holders.
However, with growth at 3 per cent, employment holding below 6 per cent and business confidence and conditions at comfortable levels, many argue that while the low inflation reading provides scope for the RBA to cut rates, it’s the longer-term consumer prices outlook that most matters.
“The RBA has never cut the cash rate while unemployment has been trending lower,” points out Scott Haslam, economist at UBS.
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