(07 February 2013 – Australia) The jobless rate and the sustainability of the recent rise in commodity prices will be the deciding factors when the Reserve Bank of Australia (RBA) has its next monthly meeting, according to experts.The RBA left the official cash rate at 3 percent this month, but left the door open for another round of rate cuts – which most economists are saying will be lowered to a record 2.5 percent by the middle of the year.
But the narrowing of the trade deficit to A$427 million in December, seasonally adjusted, down from a A$2.78 billion deficit in November, may give the central bankers reason to pause again.
The improvement was driven largely by a slump in imports and a rise in the price of mining and other resource exports.
In a statement accompanying the decision, RBA governor Glenn Stevens said it was ‘prudent” to leave rates steady this month but expressed a clear bias towards cutting rates further.
He cited the stronger property market, a growth in consumer spending and an increased bias towards riskier assets such as shares as a sign the economy was improving.
The ANZ is tipping at least two more cuts by the end of the year as the unemployment outlook weakens with the jobless rate tipped to peak at close to 6 percent.
But HSBC chief economist Paul Bloxham is much more bullish, forecasting that China will lift growth strongly in 2013.