Australia’s National Retail Association urged the Reserve Bank to hold rather than lower interest rates tomorrow so it has time to assess December shopping data, acknowledging it was unusual for the group to advise against a cut.
“The RBA is clearly running out of shots in the locker in terms of how far it can cut rates,” Trevor Evans, the association’s chief executive officer, said in a statement from Brisbane today. “Those few remaining cuts must be made when they are absolutely needed, including in the case of further economic emergencies.”
A government report Feb. 6 will probably show retail sales rebounded in December, gaining 0.3 percent from November, according to the median estimate of economists surveyed by Bloomberg. While traders see little chance of a cut tomorrow, they’re pricing in about a 70 percent chance it will lower borrowing costs by June 30, swaps data compiled by Bloomberg showed.
The RBA eased monetary policy six times from November 2011 to December last year. The overnight cash rate target is 3 percent.
Christmas sales results are likely to be “encouraging, but not spectacular,” Evans said in the statement. “Rates are already at the ‘emergency’ levels of the global financial crisis, and the RBA is therefore limited in how much lower it can move.”
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