It’s almost turned dovish:
Shadow Board Sees Downside Risks to Australian Economy Increasing but Interest Rates Should Remain Steady
Significantly, Australia’s inflation rate has fallen to 1.3% in the March quarter, putting it well below the Reserve Bank of Australia’s official target band of 2-3% and thus confirming economists’ concerns of a weakening economy. The unemployment rate ticked up to 5% in March, where consumer and business confidence measures improved slightly. The share market, following a strong overseas lead, is posting new highs. The RBA Shadow Board’s conviction that the cash rate should remain on hold next week weakened while the policy bias has clearly shifted from a rate rise to a rate cut. More specifically, the Board attaches a 54% probability that holding interest rates steady at 1.5% is the appropriate setting, while the confidence in a required rate hike equals 8% and in a required rate cut equals 38%.
