May rate cut on the cards

Pressure is mounting on the Reserve Bank of Australia (RBA) to cut the cash rate in May after unexpected hurdles slow the nation’s growth. The increasing cost of living may spark the RBA to drop rates, with average petrol prices over the long-weekend over $1.50 according to the Australian Institute of Petroleum.

The latest RP Data statistics also show a flat market with house prices, with no improvement seen over the first quarter of the year. Poor results are expected in the housing finance and employment results which will be released by the Australian Bureau of Statistics later this week.

International news is also making its mark on Australia with a slowing growth rate in China also causing damage at home. Spain conceded its debts will balloon this year to their highest level for two decades. The Spanish government announced that the debt-to-GDP ratio will leap to 79.8 per cent in 2012 from 68.5 per cent last year.

Also, news of tension between the US and China over the holiday may cause the Australian market to suffer according to the Australian Financial Review, despite the US government playing down the fears of confrontation.The industry will be keeping a close eye on the release of vital indicators in the coming week including consumer sentiment, employment figures and housing finance.



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