Mortgage holders on edge ahead of interest rate call
The Reserve Bank board will meet on Tuesday to decide whether to hike interest rates again or pause for a second month.
Reserve Bank of Australia Governor Philip Lowe. Photo: AAP/Diego Fedele
In April, the RBA kept the cash rate on hold after hiking 10 times in a row in its bid to chase down high inflation.
The central bank decided to pause to allow its increases to ripple through the economy, recognising that interest rate movements don’t take effect immediately, but said it was prepared to tighten further if incoming data called for it.
The board has since observed still-hot but cooling inflation data, a robust March jobs report, ongoing resilience in the business sector, and a turnaround for home prices.
There’s little consensus among economists in the wake of the quarterly consumer price index that resulted in inflation sinking to seven per cent annual growth from 7.8 per cent in the quarter prior.
Some are convinced the central bank has done enough but others are expecting a little more tightening next week or in the months ahead.
After the decision on Tuesday afternoon, RBA Governor Philip Lowe will likely provide more context for the decision during a speech in Perth later that evening.
Assistant Governor Luci Ellis will also deliver a speech in Western Australia’s capital on Wednesday.
At the end of the week, the bank will release its Statement on Monetary Policy, which is released four times a year and outlines its view of economic conditions at present and where they might be headed in the future.
Earlier in the week, CoreLogic’s home value index will likely dominate the agenda after it recorded an improvement in March – breaking a 10-month streak of declines.
Also on Monday, CommSec’s state of the states report will be released, which ranks the economic performance of states and territories.
Melbourne Institute’s inflation gauge will be closely watched on Monday.
The Australian Bureau of Statistics will drop a few important datasets this week, including retail trade on Wednesday, international trade data on Thursday, and lending indicators on Friday.
Plus, there’s one more week to go before Treasurer Jim Chalmers hands down his second budget on May 9, so expect to see key measures dribbled out over the course of the week.
US stock indexes advanced on Friday after strong earnings updates from Exxon and Intel offset worries over Amazon’s slowdown warning, while economic data reinforced expectations that the Federal Reserve would hike interest rates next week.
-AAP
