Daily Commentary BY THE CURVE TEAM –

Important Week of Data for RBA

11th of June, 2019

In the wake of the RBA’s decision to lower the cash rate last week, this week data could have a huge say in timing of any further interest rate cuts.

After the RBA lowered the cash rate, the market has moved to pricing in two further rate cuts. This is one more than the RBA has currently suggests is the most likely path for the cash rate. How many more cuts are to come and when we will see them will largely be determined by the data.

This weeks data will go a long way to determining the timing of any follow up move by the RBA.

Today we will get the latest monthly business survey. Both business confidence and conditions have been trending lower of late and it will be interesting to see if there has been any change to that trend now that the election is out of the way. The RBA will watching closely as well given the importance of business investment for the outlook.

Tomorrow will see the latest consumer sentiment survey. It will also be interesting to see what consumer confidence is at a month on from the election. The RBA still sees consumption as the key risk to the outlook so it will be hoping consumer confidence improves over the months ahead.

The key data for the week will be out on Thursday. The ABS will release the latest employment update at 11:30 on the day with the market currently expecting a lukewarm 16,000 new jobs for the month. Despite the expectations of a softer number, the unemployment rate is expected to drift back down to 5.1%

With the RBA adjusting their assessment of full employment, or NAIRU, down from 5% to 4 point something, the RBA will be looking for further falls in the unemployment rate over the months ahead. Any sign that the unemployment rate is remaining sticky around 5% will only put more pressure on the RBA to act.

We take a closer look at the latest update from the RBA following last weeks rate cut and what it means for the outlook our June Curve Monthly Insights due out later this afternoon.

David Flanagan

Director - Interest Rate Markets