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20 Apr 2015
Markets re-think chances of the RBA cutting the cash rate in May – ANZ
FXStreet (Barcelona) - The Team at ANZ, explains that post the robust Australian jobs report markets have reduced the expectations for a RBA rate cut in May by 25%.
Key Quotes
“Last week’s Australian labour force report surprised markets. On account of the more positive trajectory for the unemployment rate, the market has taken away some of its conviction on policy action in May.”
“Pricing now suggests a 50% chance of a cut at the May meeting, down from 75%, and a cash rate low of 1.75% by year end, up from 1.65%.”
“Tomorrow’s RBA Board Minutes and a speech by Governor Stevens in the US overnight will possibly provide more clarity on the likelihood of the RBA cutting rates at the May meeting.”
“For floating rates, the 3-month BBSW rate fell sharply in anticipation of an April cut when market pricing was nearing 90% (strong conviction). However, this time around we doubt that pricing will fall as dramatically ahead of the May meeting, given many in the market appear to believe the better employment figures significantly reduce the chances of a further rate cut.”
Key Quotes
“Last week’s Australian labour force report surprised markets. On account of the more positive trajectory for the unemployment rate, the market has taken away some of its conviction on policy action in May.”
“Pricing now suggests a 50% chance of a cut at the May meeting, down from 75%, and a cash rate low of 1.75% by year end, up from 1.65%.”
“Tomorrow’s RBA Board Minutes and a speech by Governor Stevens in the US overnight will possibly provide more clarity on the likelihood of the RBA cutting rates at the May meeting.”
“For floating rates, the 3-month BBSW rate fell sharply in anticipation of an April cut when market pricing was nearing 90% (strong conviction). However, this time around we doubt that pricing will fall as dramatically ahead of the May meeting, given many in the market appear to believe the better employment figures significantly reduce the chances of a further rate cut.”