Patrick Fresne

I wonder if many of those quoted above may be underestimating the probability of an RBA rate hike in the short term? For a number of reasons, there is a real possibility that in the months ahead there could be a jobs boom in Australia, leading to a significant fall in the rate of unemployment which could in turn prompt the RBA to increase rates, perhaps as early as July. One point to keep in mind is that following on from the most recent move by the US Fed Reserve, US interest rates are now higher than local rates for the first time since 2001, when one Australian dollar was worth less than 0.60 USD. It is possible that strong commodity prices might limit the downside to the AUD this year, but it is hard to see how strong commodity prices is negative for the Australian jobs market. The combination of solid commodity prices and a weakening Australian dollar could be a 'Goldilocks' scenario for the Australian economy, and it is not unreasonable to conclude that such an economic backdrop could provide a substantial boost to the local job market.