RBA Rates Decision

Yesterday the ANZ job ads data was positive (up 4.4%) indicating the slide in employment may be coming to an end. A number of commentators have taken this, and other recent economic data, to be justification for an RBA rate hike today. The reality is the RBA has to be very sure that it's time to remove the 'emergency' element from the cash rate before it lifts rates. Once it starts, any subsequent drop would be an admittance that they'd made a mistake.

There's no harm in waiting one more month to get a clearer picture on how the economy is holding up after much of the govt. stimulus has run it's course. Given the RBA acted decisively on the way down with bold drops in the cash rate there's no reason why they wouldn't do 50 points in November rather than 25 today and 25 a month later - or even 75 points in the new year.

My 2 cents worth is that there's a slim chance of a raise today, a bit more of a chance of a rise in Nov but a good chance of one after Christmas. Glenn Steven's recent speeches have indicated that a rate rise would come at some point but I didn't get the impression it was imminent. Having said that they don't meet in January so there may be a need to lift them before year end if they don't want to interrupt their holiday.

Given the market has already priced in a number of rises there are now some very attractive deposit rates available.