All eyes are on the Reserve Bank of Australia’s (RBA) minutes of its April 3 board meeting.
According to The Age, the RBA acknowledged growth for the global economy was expected to be at a below trend pace in 2012 because of ongoing economic weakness in Europe and a slowing of growth in China.
It seems more than ever that the RBA is now waiting for the consumer price index (CPI) data due on April 24 to determine its decision in May.
The sharemarket didn’t like the look of a slowing global economy, sending the All Ordinaries (INDEX: ^AORD) and S&P/ASX 200 (INDEX:^AXJO) sharply into reverse.
See if you can spot the inflection point. Thanks for nothing, RBA. Not surprisingly, the Aussie dollar also sank.
Source: Yahoo!7 Finance
According to Bloomberg, traders are pricing in a 91 per cent chance the RBA will reduce borrowing costs by a quarter percentage point to 4 per cent at the next policy meeting on May 1.
It sounds like a done deal. But we’ve been here before, in February, when a rate cut seemed a living certainty. Regular Motley Fool readers will know how that one ended.
Could the RBA surprise us again? A half percentage point cut on May day? I wouldn’t count it out.
With interest rates potentially about to fall, dividend paying stocks may come back into vogue.
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