This past week has seen a wealth of economic data released and the RBA holding it’s monthly meeting.
Here’s a summary of the highlights:
Record $1.9 billion deficit for the balance on goods and services for April.
Exports fall to a 2 year low.
No change to interest rates after RBA Board meeting.
Personal credit levels up 14.9% over the past year.
GDP rose by 1.1% for the March quarter. Well above expectations.
Level of growth becoming increasingly reliant upon consumer spending which is unlikely to remain sustainable in the long run.
Money markets factor in an expected rise in US rates of up to 50bp. US Fed to meet 30 June.
AUD remains under pressure from threat of higher US rates, poor trade figures and record current account deficit.
The aforementioned points confirm our view that whilst rates are on hold for the moment any upward trend in inflation figures to a level at or above the RBA’s target range would see a rate rise. With consumer spending and imports continuing to rise and GST inspired tax breaks supposedly on the way then this scenario is much more likely than any suggestion of rates easing.