The ‘will they or won’t they’ speculation about the Reserve Bank cutting interest rates at its May monetary policy board meeting tomorrow will dominate this week in Australia.
Watch for the post-meeting statement from Governor, Phillip Lowe and any reference to new forecasts for GDP and inflation.
They will certainly be in the statement, briefly, but will be expanded on in the second Statement On Monetary Policy for 2019 to be issued on Friday.
The AMP’s Chief Economist Dr. Shane Oliver reckons a rate cut is very possible tomorrow (see markets story), but if there is no cut then he expects the RBA to make it more clear that it will now be looking to cut rates, rather than waiting.
And Dr. Oliver says the revised forecasts on Friday will see the RBA’s forecasts for underlying inflation cut to 1.75% for year-end from 2% currently. Other economists say the central bank’s estimate for GDP growth will be trimmed from 3% currently, to around 2.5%.
And across the Tasman, there will be a similar story with the Reserve Bank of NZ clearly on an easing stance, so a rate trim from 1.75% to 1.50% for its cash rate would not surprise either. That will come Wednesday.
Three other Asian central banks meet to discuss monetary policy and interest rates – Malaysia, Thailand and the Philippines.
Data released this week in Australia will include the ANZ job ads (survey today, while retail sales and trade for March will be out tomorrow.
There are a few corporate results – Westpac’s interim today, Orica, News Corp and REA Group later in the week.
Watch also for quarterly production and financial reports from Vale, the big Brazilian iron ore miner, and exporter later in the week. The details will impact iron ore prices.
In the US Consumer Price Inflation data will be out on Friday – 2.1% is the forecast with core inflation around 1.8% and indicating US price pressures remain under control despite wage rises running at 3.2%.
There are also job openings for March (the so-called ‘JOLTS’ data) and the trade figures for March on Thursday. A poor figure will cut the solid 3.2% first estimate for first-quarter GDP.
The US-China trade talks finally resume this week – President Trump has started watering down his demand to try and get a deal because he wants to be able to crow about a win. He is no longer as interested in China’s cyber theft antics as he was which will upset many US tech companies in particular.
And the March quarter reporting season slows this week (see separate story on US earnings) with around 60 S& P 500 companies to release their results.
Chinese trade data for April is out on Wednesday and is expected show continued strength in exports but analysts will be watching import data closely to see if there is any sign of a pick up in demand, especially after the weakness shown in the March quarter.
Inflation data for April is out on Thursday and watch for consumer prices to again be pushed higher by rising pork prices. Producer Price Inflation is expected to show another small monthly rise.
In Britain, the fall out from the poor local government election results for the Conservatives and Labour will continue this week.
The big losses for the Conservatives have weakened Mr. May’s position as PM and the pressure is now back on her to quit sooner than later.