“While there remains no explicit bias to ease in the RBA statements that accompany monetary policy meetings, RBA Governor Stevens signalled in a speech today that interest rate cuts remain “on the table”.
“However, Governor Stevens also played down the potential impact on Australia from the equity market turmoil in China and also acknowledged that the depreciation of the Australian dollar was having an expansionary effect on the economy with the growth in services trade helping to replace the decline from commodities”.
“He added that generally there were signs of better economic conditions of late”.
“There was also a note of caution from Governor Stevens who admitted that risk-taking behaviour most responsive to easy monetary policy is the “financial type”, which can ultimately prove “dangerous”.
“So our conclusion of the speech is that Stevens provided what was expected (to signal a rate cut was still possible) but did not signal any increased urgency and hence we see the speech as broadly neutral for the Australian dollar".
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