Greg Gibbs, analyst at Amplifying Global FX Capital, suggests that for the Australian economy, the political cycle is now in focus with the national government set to announce its annual budget on 2 April, the same day as the RBA policy meeting.
Key Quotes
“It is expected to follow within a week or two by calling a national election in May.”
“With the help of strong resource sector profits over the last year, the government budget position is in relative health. The government is expected to announce significant spending increases and potential tax cuts and/or other social payments to aid their, albeit slim, chance of retaining power.”
“The prospect of fiscal stimulus might be a reason for the RBA to delay messaging rate cuts. However, it probably should not preclude them from at least acknowledging that the risks of a cut have become material in their statement next week.”
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