Job ad increase could forestall February rate cut, says ANZ, as TAB odds ease

ANZ says a bump up in job advertisements in January means the RBA can hold off cutting interest rates until March.

The latest figures show total job advertisements were 0.7% higher in January 2012 than in January 2011 – the largest rise in job advertising since February 2010.

“Against this local backdrop and that of a persistently weak (but not worsening) global economy, we have forecast that the RBA will need to cut interest rates by 25 basis points in the first quarter of 2012, most probably in March,” says ANZ head of Australian Economics and Property Research Ivan Colhoun.

“Inflation is well contained and the economy can afford to grow a little faster. Beyond March, if we see further confirmation that job ads have stabilised, this will likely be important for monetary policy expectations.

“In particular, we will be less likely to see further interest rate cuts and the market will need to remove some of the aggressive easing profile built into rate curves,” he says.

The job figures had an immediate impact on interest rate betting odds, with TAB odds of a rate cut increasing from $1.20 to $1.26 – still lower than odds it offering of Australia winning the one-day series against India and Sri Lanka, currently at $1.45.

The TAB is paying $1.20 on a 0.25% rate cut but $1.45 on the Australians winning the tri-nations tournament, despite yesterday’s 65-run thumping of the Indians.

There are very long odds ($151) on the RBA pushing up the cash rate by 0.25%.

Sportingbet.com.au is paying $1.22 on a 0.25% rate cut and $3.50 on rates staying the same.