RBA: No fireworks offered – TDS

The RBA left the cash rate unchanged at 1.50%, in line with unanimous consensus and changed a few paragraphs, but the spirit of today’s statement differs little from the message that RBA officials have provided in the last two weeks – optimistic but not hawkish, explains the analysis team at TDS.

Key Quotes

“The RBA Gov pushed back on market pricing for RBA hikes a little less than 2 weeks ago, and today’s statement again reinforces the RBA is in no rush to hike rates. In essence, the RBA appears unwilling to test highly levered household balance sheets given slow wage growth. Clearly Financial Stability is something the Bank is looking closely at. Regarding the AUD, the Bank firmed up its language on AUD appreciation, adding that the higher exchange rate is expected to contribute to ‘CONTINUED’ subdued price pressures and is weighing on the outlook, so mild jawboning here.”

“Overall the RBA is confident on the growth outlook, but in no rush to normalise the cash rate given economic growth, the decline in unemployment and the pick-up in inflation will occur ‘gradually’. The RBA retains a neutral bias in what was another uneventful announcement.”