RBA: A rate cut on Tuesday cannot be ruled out - Wells Fargo

Matías Salord FXStreet

According to analysts from Wells Fargo, the RBA will keep rates unchanged but warned that a rate cut cannot be ruled out.

Key Quotes:

“The Reserve Bank of Australia (RBA) cut its cash rate in May for the first time in nearly 12 months citing weakening inflation trends, slower Chinese growth and soft commodity prices among reasons for the change, which prompted markets to price-in additional rate cuts as these dynamics showed no sign of immediate improvement. Then a better-than-expected Australian GDP for Q1 relieved some of the pressure on the RBA to cut rates again.”

“While we do expect the RBA to remain on hold during its meeting on Tuesday, a preemptive rate cut to offset any weakness due to Brexit-induced financial market volatility cannot be ruled out.

“The August meeting is a more-likely time for a rate cut, because the RBA will have a fresh read on CPI. Although because of the lower price environment for many of Australia’s exported commodity goods, an unfavorable terms of trade dynamic could limit inflationary pressure.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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