Capex could be the RBA's tipping point

Despite mounting economic headwinds, the Reserve Bank has been reluctant to cut rates. But the next capex survey could be just the trigger needed for the central bank to act.

The Reserve Bank of Australia has taken a distinctively dovish turn, with the minutes from the June meeting less optimistic than its policy statement earlier this month. Nevertheless, the RBA is likely to leave rates unchanged for some time yet -- consistent with its recent statements -- but it is becoming increasingly difficult for our central bank to ignore the mounting headwinds facing the Australian economy.

Yesterday I laid out why the RBA should cut rates further. Negative real wages are beginning to weigh on household spending, and budget cuts -- mostly directed at lower-income earners -- haven't helped either.

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