Macquarie Wealth Research has noted May is the third most popular month for RBA policy changes.
Rates were cut in May twice in the past three years. The post-CPI, Statement on Monetary Policy meeting window offers a prime presentational opportunity for cuts.
Although the bank thinks the risk lies with the RBA being sidelined through to May.
“Perceived popularity challenges for the government mean the fiscal environment is more charged than normal,” the bank advised clients.
“The release of the Intergenerational Report means the fiscal policy window starts early.
“Confidence took a hit from the last Budget.
“The leadership landscape is such that there is a risk an RBA policy move could be co-opted as proof, or judgement, of the quality of the Budget or of the leadership.
“A June decision could be similarly tainted.
“The air clears from July, which brings August into the frame.”
The bank thinks that an RBA cut in April is also unlikely.
“Having received the capex figures, and the suite of GDP partial components, there is little in the way of top tier domestic data to drive the RBA to hold over a decision until April,” the bank said.
“The one catalyst we could envisage would be the release of the semi-annual Financial Stability Review (FSR) on 25 March.
“Given the hyperbole that has followed the February cut, the FSR would provide the RBA with the opportunity to present its assessment of the financial stability risks arising from future rate cuts.
“This is an unlikely scenario for an April decision, but one which can’t be ruled out given the infancy of macro prudential tools in Australia.”
This article originally appeared on Property Observer.