2 Dec 2014
RBA policy stance to remain neutral - Nomura
FXStreet (Bali) - Charles St-Arnaud, Economist at Nomura, expects today's RBA policy stance to remain neutral, with views on AUD still likely seen as high and needing to depreciate.
Key Quotes
The Reserve Bank of Australia (RBA) will hold its next monetary policy meeting on 2 December. At its board meeting in November, the RBA left its policy rate unchanged at 2.50% and stated that “monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target” and that, “the most prudent course is likely to be a period of stability in interest rates”. The Central Bank also reiterated that the currency remains too strong and, as a result, “is offering less assistance than would normally be expected in achieving balanced growth in the economy.”
"Indicators received since the November meeting have been mixed. As a result, we think the statement will continue to suggest that the RBA is not considering any changes to its policy stance and will very likely reiterate that “the most prudent course is likely to be a period of stability in interest rates.” We continue to believe that the RBA will keep monetary policy unchanged until mid-2015."
"We believe that, despite the weaker AUD on the month, the RBA is also likely to emphasise that AUD “remains high by historical standards, particularly given the further declines in key commodity prices in recent months” and that “it is offering less assistance than would normally be expected in achieving balanced growth in the economy.”
"With the FOMC expected to continue to signal that policy normalisation stays on track and commodity prices remain weak, we continue to believe that AUD/USD should continue drift lower in coming months, as the currency continues to realign to weaker commodity prices."
Key Quotes
The Reserve Bank of Australia (RBA) will hold its next monetary policy meeting on 2 December. At its board meeting in November, the RBA left its policy rate unchanged at 2.50% and stated that “monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target” and that, “the most prudent course is likely to be a period of stability in interest rates”. The Central Bank also reiterated that the currency remains too strong and, as a result, “is offering less assistance than would normally be expected in achieving balanced growth in the economy.”
"Indicators received since the November meeting have been mixed. As a result, we think the statement will continue to suggest that the RBA is not considering any changes to its policy stance and will very likely reiterate that “the most prudent course is likely to be a period of stability in interest rates.” We continue to believe that the RBA will keep monetary policy unchanged until mid-2015."
"We believe that, despite the weaker AUD on the month, the RBA is also likely to emphasise that AUD “remains high by historical standards, particularly given the further declines in key commodity prices in recent months” and that “it is offering less assistance than would normally be expected in achieving balanced growth in the economy.”
"With the FOMC expected to continue to signal that policy normalisation stays on track and commodity prices remain weak, we continue to believe that AUD/USD should continue drift lower in coming months, as the currency continues to realign to weaker commodity prices."