Weak Wage Price Index Could Intensify Expectations for a RBA June Rate Cut

Weak Wage Price Index Could Intensify Expectations for a RBA June Rate Cut

16 May 2016, 19:16
Roberto Jacobs
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Weak Wage Price Index Could Intensify Expectations for a RBA June Rate Cut

The Reserve Bank of Australia (RBA) cut the cash rate to a record 1.75 per cent at its recent monthly board meeting, and analysts expect it could be heading towards one per cent before the end of the year. Minutes of the May board meeting to be released on Tuesday, are expected to show how close was the decision to cut the rate for the first time in a year.

Australia wages data scheduled for release on Wednesday is expected to show growth remaining benign, but just ahead of a deteriorating inflation backdrop. Economists at Commonwealth Bank of Australia expect the wage price index - the RBA's preferred measure of wage growth - will show the annual rate at just 2.2 per cent. A weaker result could intensify expectations for a June rate cut

Australia's unemployment rate unexpectedly fell to 5.7 per cent in March, its lowest level since the coalition came to power in September 2013 and after hitting 6.3 per cent several times during late 2014 and early 2015. Australian economy is forecast to add 12.5k jobs in April, down from 26.1k jobs in March. The unemployment rate is expected to rise slightly to 5.8%.

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