ANZ analysts point out that for the Australian economy, following the Q1 CPI we now have a combination of stable unemployment and falling inflation.
Key Quotes
“In recent months both inflation and GDP growth have surprised materially to the downside. We think this will see the RBA ease in May given the impact these developments will have on its outlook. The timing of the election is a complication, but we don’t think it will stop the RBA from acting if its forecasts lead to the conclusion further monetary stimulus is required.”
“Will 25bp rate cuts in May and August be enough given the prospect, among other things, that it may not generate much in the way of AUD weakness? Perhaps not, but we think it will satisfy the RBA for now.”
“We can’t rule out the RBA not cutting and instead moving to an explicit easing bias ahead of more confirmation that inflation pressures have eased.”
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