TWEET TALK: The ayes of May

There is late money for a rate cut today after a month of stagnant economic data gave support to the case for the Reserve Bank to move.

Tweet Talk takes the best of Twitter and brings it to you. Today, economists weigh in on the move they think the RBA will make on interest rates for May.

For the first time since December, when the Reserve Bank last cut rates, to 3 per cent, there is some doubt in the air as to what the board will decide in its monthly meeting, being held today.

All 13 economists surveyed by AAP last week expected the bank to keep the cash rate unchanged at 3 per cent.

But BK Asset Management managing director Kathy Lien said the market had put the odds of a rate cut at around 55 per cent.

Economists agree another cut is in the pipeline at some stage – some on Twitter say it should be today.

“RBA to cut 0.25 per cent. CapEx/revenues from mining boom are softer. Lead indicators are pointing south. Need to further stimulate,” Arab Bank Australia treasury dealer David Scutt (@David_Scutt) tweeted.

“Some suggesting cutting the cash rate will harm confidence. Doesn't look the case for US, UK, European and Japanese equities,” he added.

AMP Capital chief economist Shane Oliver (@ShaneOliverAMP) was similarly convinced that the time was ripe for the bank to move.

“1.5 per cent fall in ANZ job ads after fall in March is more of a concern. Allied with benign TD-MI Inflation Gauge supports case for RBA rate cut tomorrow,” he wrote.

Oliver had been calling for the cut throughout the month as economic indicators mostly backed the case for more easing.

“Disappointing 5.5 per cent fall in building approvals in March driven by multis adds only adds to pressure on RBA to cut again,” he said.

“Indicators relating to Aust home buyer market support interest rates on hold case. Other economic indicators mostly lean to need for more RBA cuts.

“Govt said to lower growth forecast to 2.75 per cent. No surprise as market forecasts already there. We forecast 2.5 per cent. Highlights need for RBA cut though.”

Business Spectator columnist and Market Economics managing director Stephen Koukoulas (‏@TheKouk) joined the chorus, citing inflation levels.

“Retail sales data show low inflation: We are buying more but paying less. This is the budget theme and why RBA will cut,” he said.

But Eureka Report investment strategist Adam Carr (@AdamCarrEcon) made the case for no move.

“The decision for RBA to hold should be very easy – economy at trend, low unemployment rate and core CPI at mid-point of band. Once again no case to cut,” he wrote.

OptionsXpress market analyst Ben Le Brun (@benlebrun) was another predicting a hold.

“No change coupled with a very dovish statement to pave the way for a cut in June,” he wrote.

“RBA is conservative and will want to see capex first.”

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