SYDNEY (Reuters) – Australia’s jobs market looks healthier than it has in months, while house prices are cooling in the face of tighter lending rules, all arguments for steering a steady course on interest rates this week.
For in depth analysis of Cambodian Business, visit Capital Cambodia
The Reserve Bank of Australia (RBA) holds its July policy meeting today and is almost certain to keep rates at 1.5 percent, where they have been since August last year.
All eyes will be on the post-meeting statement for any hint of hawkishness given central banks in Europe and Canada had surprised recently by talking of the need for tighter policies.
That change in tune led the futures market to abandon any thought of another easing in Australia and instead imply a one-in-ten chance of a hike in rates by Christmas.
Economists, though, remain much more circumspect and dovish. A Reuters poll of 50 analysts found all but one expected rates to stay steady this week and most saw no move until late 2018.
“In our view the RBA is unlikely to be hawkish given still elevated labour market slack and subdued inflation,” said Tapas Strickland, an economist at NAB.
“Nevertheless, the statement could well read more positively given May’s stellar labour figures and the market might well infer a hawkish tilt even if it isn’t,” he added.
Employment blew past forecasts to jump 42,000 in May, a third straight month of upbeat outcomes that drove the jobless rate to a four-year trough of 5.5 percent.
Leading indicators of labour demand are also healthy with ANZ’s measure of job advertisements climbing 2.7 percent in June to its highest since 2011.
“We think the strength of employment will be a key factor in stabilising, and possibly lifting, consumer sentiment,” said David Plank, ANZ’s head of Australian economics. “This will be important in ensuring downside risks to the economy don’t materialise.”