Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Summary: The Reserve Bank of Australia’s June meeting is likely to be an even closer call than the May meeting in terms of whether the central bank will move to cut the official cash rate.
But the RBA is behind the curve and has shown its hand in not being pre-emptive, given that it has been so reluctant to ease it is likely it will need two or three months of labour market data to confirm the trend after robust employment growth in Q1 and record levels of participation.
On that basis cuts are unlikely to be imminent, given that labour market data is notoriously volatile. The standard error on the change in employment each month is around ±30,000, therefore labour market data’s inherent volatility means a reluctant central bank will require consistent data deterioration to cut rates. By that time, flagging growth momentum and the weakness pointed to by several leading indicators may have caught up with the labour market already. So with rate cuts likely an inevitability we await Governor’s Lowe's speech tomorrow for clarity on timing.
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