29 Nov 2013
Flash: RBA to jawbone the A$ - BAML
FXstreet.com (London) - Strategists at Bank of America Merrill Lynch said they believe the RBA will be on hold at its meeting next week as it continues to assess the data flow.
Key Quotes:
“However, it has seemingly sought to loosen monetary conditions by making a concerted effort to talk the A$ lower in recent communications. With a depreciation of the currency the RBA's preferred means of loosening conditions and supporting the rebalancing of the economy, rather than by lowering the cash rate further”.
“Although investment intentions improved in data released this week we are not convinced it did so enough to warrant the RBA removing its current easing bias”.
“Over the coming months we look to labor-market data as being key to determining the path of monetary policy. Historically, the RBA continues to loosen policy when the unemployment rate is rising”.
“Our view remains that the RBA will cut rates again in 2014 and keep policy accommodative over this period. A markedly lower exchange rate remains the key risk to this view”.
Key Quotes:
“However, it has seemingly sought to loosen monetary conditions by making a concerted effort to talk the A$ lower in recent communications. With a depreciation of the currency the RBA's preferred means of loosening conditions and supporting the rebalancing of the economy, rather than by lowering the cash rate further”.
“Although investment intentions improved in data released this week we are not convinced it did so enough to warrant the RBA removing its current easing bias”.
“Over the coming months we look to labor-market data as being key to determining the path of monetary policy. Historically, the RBA continues to loosen policy when the unemployment rate is rising”.
“Our view remains that the RBA will cut rates again in 2014 and keep policy accommodative over this period. A markedly lower exchange rate remains the key risk to this view”.