More Signs Are Pointing Towards Another RBA Rate Cut This Month

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The market has sent a big signal that it thinks another cut in Australia’s official interest rates to a record low of 2.75% is likely when the Reserve Bank Board meets next week.

David Uren reports at The Australian that the bond market raised the chance of a rate cut to 56% yesterday, up from 36%.

A surprise fall in building approvals helped stir more unease among investors, but there have been growing signals that the Australian economy may be stalling as the mining boom passes its peak. Other sectors are not stepping in to fill the activity gap fast enough.

The federal government’s announcement this week that revenues were $12 billion short has compounded the gloom.

Goldman Sachs last week issued a grim economic note in which is warned of a range of increasingly worrying indicators about the state of the economy, including that inflation figures have been coming in lower than expected for five of the past six quarters.

Many analysts had expected a rate cut likely in June or July; Goldman said the Reserve was likely to move in May.

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