Data to flesh out growth, rate expectation
Market watch top headlines
CANBERRA, Nov 27 AAP
November 27 2012, 5:50PM
Economic data over the next few days will not only flesh out expectations for next week's national accounts, but also whether the central bank will cut the cash rate again.
Financial markets are putting a 50/50 chance of a cut in the cash rate to 3.0 per cent from 3.25 per cent at next Tuesday's monthly board meeting, which would be the lowest level since the depths of the 2008-2009 global financial crisis.
Consumers are clearly hoping the Reserve Bank of Australia (RBA) will deliver a cut, with an online poll of 907 people by mortgage provider Loan Market released on Tuesday finding 72 per cent expect a reduction.
"It's becoming clearer that the previous rate cut in October and the consecutive cuts in May and June aren't lifting the struggling sectors of the economy and haven't been enough to combat the high Australian dollar," Loan Market corporate spokesman Paul Smith said.
A separate report found that housing affordability continues to improve on the back of low interest rates, steadily growing incomes and easing home prices.
The Housing Industry Association-Commonwealth Bank of Australia (HIA-CBA) housing affordability index increased for a seventh consecutive quarter - it rose by 5.3 per cent in the September quarter, to be 15 per cent higher than a year earlier.
HIA chief economist Harley Dale said tentative signs of a recovery in housing transactions volumes should hopefully gather pace.
"Another interest rate cut in early December would enhance the prospects of this occurring," Dr Dale said.
Financial comparison website RateCity.com.au said low interest rates lured four per cent more first home buyers into the housing market in September, compared to a year earlier.
But RateCity spokesperson Michelle Hutchison said it was important for buyers to prepare for rate rises.
"Even if the Reserve Bank drops the cash rate next week or next year, it's inevitable that interest rates will eventually rise," she said in a statement.
Borrowers should plan for a buffer of at least two percentage points more than what they were currently paying - or an extra $400 per month on repayments for a $300,000 home loan.
Economists will be watching Wednesday's release of construction data and Thursday's capital expenditure report to see what impact a sharp drop in commodity prices earlier this year had on mining investment, and how that likely impact on growth in the September.
Meanwhile, Opposition Leader Tony Abbott has committed a coalition government to creating millions of jobs within a decade.
During a pep talk at the final joint coalition party room meeting for 2012, Mr Abbott said economic reform would start with getting rid of the carbon and mining taxes, and removing $1 billion a year of business red tape.
"If we can do what we have pledged to the Australian people - that we will strive to deliver and I am so confident that we can - we will deliver one million new jobs over five years, two million new jobs over a decade," Mr Abbott said.
But Assistant Treasurer David Bradbury said the the only jobs strategy Mr Abbott had articulated had been the slashing of jobs by premiers Campbell Newman and Barry O'Farrell.
By Colin Brinsden, AAP Economics Correspondent