In the next week, the data will focus on:
- homes sales (which are running near a 10 year low);
- credit (housing credit is hovering at a 34 year low);
- house prices (down for 8 months in a row);
- private capital expenditure (booming and likely to keep booming for quite a while yet);
- retail trade (last couple of months show retail sales lifting off the recessionary growth rates of mid-2011); and
- building approvals (volatile each month, but still we have a housing shortage it seems and need to build more houses).
It would take a run of strong results across most of these indicators to alter the course for a 25 point cut.
RBA Governor Glenn Stevens noted last night in his speech to the Australian Business Economists that developments in Europe posed a significant downside risk to the global (and Australia's) economic wellbeing. That is very true. Throw in the problems in the US and the stalling of growth in Chinese manufacturing and it is clear where the RBA biases are.