Neutral RBA to sit tight until 2018 - TDS
|The RBA left the cash rate at 1.5% as widely expected and the tone was balanced, with a brighter outlook for business investment tempered by the ‘usual’ concern about tepid household consumption, explains the research team at TDS.
Key Quotes
“AUD wobbled but settled around $US0.768 as the markets realised that there was nothing new in the statement. As it is Melbourne Cup Day, local market attention swiftly turned to the racetrack.”
“We see low hurdles for our base case of a +25bp hike in May 2018. Employment growth is already strong, predominately in full-time, wages growth may be low, but is past the trough and underlying inflation is expected to be within the RBA’s 2-3% target band.”
“By then, the Fed has likely hiked five times, the Bank of Canada three times and the Bank of England twice.”
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