22 Jul 2013
Flash: Risk narrowly skewed for an RBA cut in August - RBS
FXstreet.com (Barcelona) - Despite a rate cut by the RBA on August 6 is not clear cut, Greg Gibbs, FX Strategist at RBS, thinks that if inflation proves soft this week and the AUD remains above 0.90, "I narrowly expect the RBA to cut in August" Gibbs said.
Key quotes
"Housing is improving and China is on a more moderate growth path, but has not deteriorated further. Non-housing activity remains subdued, but would be better served by a lower exchange rate than lower interest rates. There is an argument to just maintain an easing bias, but leave rates on hold."
A decision to cut may get some additional supporters since policy will have been on hold for three months and, if inflation is low, another incremental cut could add some additional support to the economy that is still in the early stages of transitioning from a mining boom, and the currency is still regarded as too high."
"The RBA could detail its outlook three days later in its quarterly Statement on Monetary policy on 9 August. Provided inflation proves tame and the AUD is above 0.90, I narrowly expect the RBA to cut in August."
Key quotes
"Housing is improving and China is on a more moderate growth path, but has not deteriorated further. Non-housing activity remains subdued, but would be better served by a lower exchange rate than lower interest rates. There is an argument to just maintain an easing bias, but leave rates on hold."
A decision to cut may get some additional supporters since policy will have been on hold for three months and, if inflation is low, another incremental cut could add some additional support to the economy that is still in the early stages of transitioning from a mining boom, and the currency is still regarded as too high."
"The RBA could detail its outlook three days later in its quarterly Statement on Monetary policy on 9 August. Provided inflation proves tame and the AUD is above 0.90, I narrowly expect the RBA to cut in August."