The RBA voted to keep its benchmark interest rate at 1.75% earlier this month. That was the second consecutive month interest rates have remained on hold. Policymakers voted to cut the benchmark rate by 25 basis points to 1.75% in May, a new all-time low. Like in May, the justification for another rate cut likely boils down to inflation. Australia’s quarterly inflation report pointed to alarmingly weak price growth through the first three months of the year, compelling the nine-member Reserve Bank Board to ease monetary policy further. Market participants widely expect a further reduction to the benchmark interest rate later this year as officials look to quell Australia’s deflationary spiral.
From Australia, on Thursday, NAB Quarterly Business Confidence data was released. Business conditions improved a little further in the June quarter, rising 1 point to +11 index points, which is well above the long-run average – largely supported by very high trading conditions and profits. According to NAB Group Chief Economist Alan Oster, “firms were still reporting business conditions consistent with an ongoing recovery in the non-mining sector”.
This week markets will be looking at:
CPI (Wednesday 3:30)
PPI (Friday 3:30)
