RBA likely to continue rate cuts in 2013 after unemployment rise: Macquarie’s Brian Redican

The unexpected rise in the unemployment rate in March may prompt the Reserve Bank to begin cutting rates again, but not immediately, says Macquarie senior economist Brian Redican.

The unemployment rate increased by 0.2 percentage points to a two-and-a-half year high of 5.6% in March.

Redican attributed to the rise in unemployment – 36,000 jobs were lost over the month – to a weakening in the jobs market possibly due to a slowdown in mining investment.

He told AAP the March figures would be added the “column suggesting further rate cuts may be needed.”

However, he said the RBA was unlikely to cut the cash rate on one set of numbers alone.

The most recent Bloomberg survey of economists has Macquarie Bank tipping a cash rate of 2% by the end of the year, with a rate cut pencilled in for May.

HSBC chief economist Paul Bloxham says that the labour force survey can be very volatile with the past couple of months “a clear example of this” and also points out that the ABS is 95% confident the unemployment rate was between 5.4% and 5.8%.

Source: http://www.propertyobserver.com.au/rba-rate-decision/rba-likely-to-resume-rate-cuts-sometime-in-2013-after-unemployment-rise-macquaries-brian-redican?utm_source=po&utm_medium=aida&utm_campaign=news