RBA Focus Of The Week, Another Close Call

The focus of this week is Tuesday’s RBA meeting and Wednesday’s Q1 GDP data. Bloomberg consensus has rates being left at 3.85% but forecasters are not unanimous. GDP is expected to slow.

• The RBA surprised markets and forecasters by hiking 25bp in May and the June meeting is also looking close with around a third of forecasters, including ANZ, expecting a 25bp hike and the market sitting on the fence.
• On Monday, the Melbourne Institute’s inflation gauge for May prints. In April it rose to 6.1% from 5.7%.
• Q1 inventory and company profit data are also on Monday. Inventories are expected to rise 0.3% q/q while profits are forecast to rise 2% q/q after +10.6% in Q4. ANZ-Indeed job ads for May are also released. They fell for the third consecutive month in April but the level of vacancies remains elevated.
• The current account for Q1 is published on Tuesday and the surplus is expected to widen to $15bn from $14.1bn. The release also includes the net export contribution to GDP which is expected to show a detraction of 0.5pp.
• Q1 GDP prints on Wednesday and is projected to rise 0.3% q/q and 2.4% y/y after Q4’s 0.5% and 2.7%, as the economy continues to slow. The productivity/ULC components will be a particular focus of the national accounts given the RBA’s recent comments on ULC growth being inconsistent with the inflation target. Also watch the price deflators.
• Finally on Thursday trade data for April are published. The trade surplus is expected to narrow to $13.65bn from $15.3bn. Note that the data is nominal and so impacted by commodity price moves.