Rate cuts almost certain at today's RBA meeting

by Mackenzie McCarty04 Dec 2012

Today is tipped to see the RBA slash interest rates to new record lows, with many economists expecting rate cuts of up to 0.25%.

Further adding to the speculation is the fact that Australian Bureau of Statistics (ABS) data released yesterday showed retail spending was steady in October, below expectations of a 0.4% rise.

The RBA kept the cash rate on hold at 3.25% last month, but economists predict that the above information - and the fact that company profits fell 2.9% in the September quarter, seasonally adjusted - mean the central bank will have to adjust rates accordingly.

Australian job advertisements also fell for an eighth consecutive month, according to the ANZ Job Ads survey, released yesterday. The total number of advertised positions fell 2.9% in November, after a drop of 4.6% in October.

These figures take the total number of job ads to the lowest point since January, 2010.

Without monetary policy change from the central bank, economists warn that Australia's unemployment level could rise to 6% by the end of next year.

According to the ABS, the only industry to experience a rise in consumer spending in October was food retailing (0.9%). This was offset by falls in household goods retailing (-1.6%), other retailing (-0.5%), cafes, restaurants and takeaway food services (-0.3%), department stores (-0.1%) and clothing, footwear and personal accessory retailing (-0.1%).

Turnover rose in Western Australia (1.2%), Queensland (0.5%), New South Wales (0.1%) and the Northern Territory (3.5%). These rises were offset by falls in Victoria (-0.5%), South Australia (-1.1%), the Australian Capital Territory (-2.2%) and Tasmania (-1.9%).

Over the longer term, Western Australia remains the strongest performing state (up 0.8%).