On Monday, our esteemed leader Peter Switzer called out that this one was a big week for markets. Furthermore, he added that the data, once unpacked, would help the RBA decide either way on rate cuts ahead of its meeting on Monday and Tuesday of next week (19 and 20 March 2025).

For weeks, markets have leaned into the idea that the Reserve Bank of Australia (RBA) would cut interest rates at its next meeting. Economists, brokers, and even some real estate agents have been pricing it in. But after this week’s data dump, the picture isn’t quite so clear.

The case for a cut still exists - but it’s now walking with less of a spring in its step.

Let’s break it down by the numbers.

A jobs number too strong to ignore

If the RBA was looking for a soft signal to justify cutting rates, they didn’t get it from the labour market. Australia added 89,000 new jobs in April, more than four times the forecasted 20,000. The unemployment rate stayed steady at 4.1%, but the participation rate rose to 67.1%, meaning more Australians are entering the job market, and finding work.

This isn’t the data you’d expect from an economy crying out for monetary easing. It’s the kind of print that makes central banks nervous about moving too early and stoking inflation.

Wages are rising, just a little more than expected

On Wednesday, the Wage Price Index came in at 0.9% growth for the quarter, or 3.4% annually, just a tick above forecasts.

This isn’t a runaway figure, but paired with that robust employment report, it reinforces the idea that there’s underlying strength in the economy. And for the RBA, wage growth is a critical signal. If wages continue to push higher, the central bank may worry that inflation pressure could re-emerge, particularly in the services sector.

Consumer confidence is lifting

Not all the data was red-hot, hoewever. Consumer confidence rose by 2.2% in May, up to 92.1. The direction of travel matters here. That uptick reflects growing optimism around a potential rate cut, and perhaps some relief following the federal election.

The RBA will be watching this closely.

Monetary policy is as much about sentiment as it is about spreadsheets. A rate cut could add fuel to this improving confidence, but the risk is that it overheats already tight sectors, like housing.

Business confidence is still negative, and businesses are pulling back

The NAB survey for April showed that business confidence edged up slightly, rising 1 point to -1, but it remains in negative territory and well below its long-run average. Confidence was mixed across sectors, with manufacturing seeing improvement, but retail and wholesale dragging sentiment lower in trend terms.

At the same time, business conditions eased from +3 to +2, with a sharp 4-point fall in profitability.

For the RBA, this is a soft signal. While businesses aren’t falling off a cliff, they’re not gearing up for growth either. The weak capex and softer profitability point to a private sector still in “wait-and-see” mode. That arguably supports the case for a rate cut more than it weakens it — but only if the RBA believes demand can be lifted without stoking inflation.

Global conditions not yet a headwind

Over in the US, inflation ticked down slightly to 2.3%, below forecasts.

That gives the RBA some breathing room, as global inflation doesn’t appear to be re-accelerating.

Fed Chair Jerome Powell did strike a more hawkish tone this week, but unless the US suddenly shocks markets with another inflation wave, external pressures are unlikely to derail Australian monetary policy in the near term.

Will the RBA cut rates on Tuesday?

This week’s data has complicated the story. What looked like a clear window for a symbolic 25 basis point cut is now a tougher call.

The strong jobs growth and slightly hotter wage data may give the RBA enough reason to wait until June, especially if they want to avoid reigniting housing market speculation or inflation expectations.

But don’t count the cut out completely.

If the RBA sees the consumer confidence rise as fragile, or the wage data as contained, they may still go ahead, using strong current conditions as a buffer to act pre-emptively against future softness. In other words: cut now, before it’s obvious you have to.

Or you could just cross your fingers and listen to CBA boss Matt Comyn, who thinks that we've got this one (and a few more) in the bag.