RBA: Watching and waiting at 2% - TDS

FXStreet (Delhi) – Research Team at TDS, notes that the RBA left the cash rate at 2% as widely expected but revealed little for what’s in store with respect to the Bank’s GDP and CPI forecasts.

Key Quotes

“The tone was more measured compared with recent RBNZ/Fed statements, the Bank taking a wait and see approach with the dovish element confined to noting financial market volatility and that the outlook for global growth is slightly less than that previously expected.

As is the Board’s way, China was confined to “China's growth rate has continued to moderate”. The Board dropped any reference to the U.S. Federal Reserve tightening cycle, as the RBNZ did last week.

Once again the Bank left the door open to cut rates further, stating “Continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand”.

The RBA did not specifically jawbone the exchange rate, again, with “The exchange rate has continued its adjustment to the evolving economic outlook”. There was an opportunity to highlight the continued decline in the terms of trade and expecting further AUD adjustment, but the Board is still patient, and letting the market decide.”