The mixed tone of the data released since the Reserve Bank of Australia’s (RBA) last policy meeting probably isn’t enough to spur the Bank to cut interest rates from 2.0% at the meeting scheduled for Tuesday 7th July. The wildcard is the crisis in the euro-zone. Should events in Europe send the financial markets into a tailspin early next week, the RBA may act. Otherwise, we suspect it will leave the door open to further easing and, if the domestic economic data weaken as we expect, rates may yet be cut to 1.5% by December.
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