As reasoned earlier this week, I had already shifted away from a May rate cut based upon the RBA’s new brief as housing bubble manager (versus it’s old one as economic manager). Two days of data now make that a strong base case with:
- tearaway auction clearances
- a modest bounce in the NAB survey
- decent activity in the labor market
- car sales to record highs
- poor consumer confidence but not poor enough
These are all cyclical ripples from the bubble that change absolutely nothing about the deteriorating structural outlook beyond a few months but it’s reason enough for the bubble managers to give housing time to cool off before cutting again. There is little tier one data before then, only the CPI, and it will not matter much.
