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Final data coming to inform next RBA rates decision

Retail sales data and the monthly consumer price index will offer some insights into spending behaviour and the likely trajectory for inflation.

March 27, 2023
By Poppy Johnston
27 March 2023

The Reserve Bank will soon get the final two pieces of the economic puzzle that will inform its key April cash rate decision.

Both a pause and another hike are still in play, with analysts undecided on which way the central bank will go.

A pause will be welcomed by mortgage holders, who have endured 10 interest rate hikes in a row that have added hundreds or thousands of dollars to their monthly repayments.

Since the central bank signalled it was getting closer to holding fire on interest rate rises to observe the impact of its tightening, it has digested robust employment data and business condition surveys that will bolster the case for another hike.

On the other hand, financial instability in the US and Europe should help cool the global economy, although further interest rate increases from the US Federal Reserve and other major central banks last week will complicate matters for the RBA.

Australian Bureau of Statistics retail trade data, due on Tuesday, will offer some insights into consumer spending behaviour, a key source of uncertainty for the central bank.

CommSec economists Ryan Felsman and Craig James said the indicator had been volatile over the past three months, which would complicate the RBA’s thinking on interest rate settings.

The monthly gauge of consumer prices, due on Wednesday, will also give the RBA an up-to-date picture of where inflation is headed.

The central bank will be looking at the volatile index for further signs inflation has peaked and is tracking down. 

In other RBA news, Ellis Connolly, the head of the payments policy department, will deliver a speech on Monday about the shift to electronic payments.

An independent review of the RBA is due to wrap up this week and Treasurer Jim Chalmers is expected to release its findings and the government’s response before the May budget.

The national statistics bureau will release February job vacancy data on Thursday and private sector credit data on Friday.

US markets finished higher on Friday after a week dominated by investor fears over a potential crisis in the banking sector.

The Dow Jones Industrial Average rose 132.28 points, or 0.41 per cent, to 32,237.53, while the S&P 500 gained 22.27 points, or 0.56 per cent, to 3970.99.

The tech-heavy Nasdaq Composite index added 36.56 points, or 0.31 per cent, to 11,823.96.

Australian share futures were down slightly, losing three points to 6980.

The benchmark S&P/ASX200 index finished the week 0.19 per cent lower, dropping 13.4 points to 6955.2.

The broader All Ordinaries finished down 11 points, or 0.15 per cent, to 7137.6.

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