Concerned that the Chinese economy is slowing down and affecting the Australian economy, the market expects that the next rate cut will be in May. Interest rate traders last week generally expected a 0.25-point rate cut in June, but now they think it will be cut in May.
The previous major analysts had expected that the rate cuts would occur after April. When the employment data in December showed that the unemployment rate had fallen to 5.1%, the market had expected the next rate cut to be in August.
The RBA will meet today but is expected to keep interest rates unchanged. But the market has pushed the probability of a rate cut this week from 10% to 26%.
