Jarrod Kerr Rate Quotations

Recent soft economic numbers for Australia and the fall in the annual rate of inflation add up to an unchanged cash rate on Wednesday. In fact, we forecast an unchanged rate for all of 2006.

Employment is likely to be much weaker going forward and the jobless rate will keep rising as the economy cools. Interest rates are on hold.

A rate hike is now 50-50 in May and fully priced by June.

The probability of rate cuts this year is very high and we see 100 basis points of easing starting in July or September.

We don't think there is anything to warrant a rate move from the central bank. Even though building approvals rose in November, housing is still in correction mode.