Australia has become a lonely rate-cut candidate
Australia and Switzerland are the only advanced economies seen cutting interest rates over the next one year as most others including the US are in the throes of tightening monetary policy.
Since the Reserve Bank of Australia’s last policy decision on 2 May, market bets on a rate cut by the end of this year have doubled.
While that chance is still only about 20%, swaps traders see Australia as one of just two developed economies where rate cuts are possible over the next one year after data during May pointed to anaemic growth in the first quarter.
Truck rentals drop as GST fears hit cargo movement
Fears of losses during transition to the new GST (goods and services tax) regime have curtailed the free movement of factory output. Reports of glitches in implementation have put wholesalers, dealers and traders on the back foot.
They are unwilling to lift factory output and stock up inventory. Hence, the lower demand for transport led to truck rentals tumbling by 4-4.5%, harder than the fall in diesel price in May.
Add to this, agri-produce movement would have tapered off as it’s well past the harvest season.
The Indian Foundation for Transport Research and Training anticipates that agri-produce movement will ebb further as the monsoon sets in.
Volumes hit new high on spot electricity market
Volumes in the spot electricity market on the Indian Energy Exchange (IEX) hit a new high of 4,100 million units (MU) in May.
This is almost a 40% jump from the same month a year ago when 2,929 MU were traded. According to IEX, a hotter summer and higher procurements by electricity distribution firms drove the volume growth. Higher demand also pushed up prices.
The average market clearing price rose from Rs2.32 per unit in the year-ago month to Rs2.92 this year. In April this year, the average market clearing price stood at Rs2.77 per unit.