FXstreet.com (Barcelona) - The RBA appeared more settled than investors would have expected as they left the cash rate at 3.5% after Tuesday’s Board meeting. Not even a hint of an easing bias as they said their inflation outlook hadn’t changed (so tomorrow’s quarterly statement will still have underlying inflation at 2-3% in the years ahead).
There was some early evidence for lowering interest rates as supported by housing prices and credit growth. According to the Analyst Team at NAB, “This is merely an observation of the mix of a higher AUD and falling terms of trade implying no urgency to offset it with either FX intervention or a rate cut.”
“So to get another cut - as most still expect - the economy will either need to take another down-leg to rebuild the rate cut case and/or the AUD go much higher. If that doesn’t happen the RBA won’t cut again, which more than a remote possibility now.” they add. Moreover, if a cut is on deck, it is likely to come later this year, or even in 2013, than in September or October.
There was some early evidence for lowering interest rates as supported by housing prices and credit growth. According to the Analyst Team at NAB, “This is merely an observation of the mix of a higher AUD and falling terms of trade implying no urgency to offset it with either FX intervention or a rate cut.”
“So to get another cut - as most still expect - the economy will either need to take another down-leg to rebuild the rate cut case and/or the AUD go much higher. If that doesn’t happen the RBA won’t cut again, which more than a remote possibility now.” they add. Moreover, if a cut is on deck, it is likely to come later this year, or even in 2013, than in September or October.
