RBA: Cash rate on hold, no surprises in the Governor’s Statement - Westpac

Bill Evans, Research Analyst at Westpac, points out that the RBA decided to leave the cash rate at 1.50% and remains cautious around the outlook for the consumer while retaining a conservative unemployment forecast.

Key Quotes

“There were two issues that we thought might change in this Statement, particularly if the Governor had decided to be more upbeat in his commentary.”

“The first one was whether he would continue to describe the outlook for household consumption as “a continuing source of uncertainty”. This description was used in the September Statement but was dropped from the Minutes of that meeting. However, the comment has been repeated in today’s Statement.”

“Secondly, we remain perplexed as to why the Bank can be optimistic about a lift in wages growth when it is only forecasting that the unemployment rate will fall from the current 5.3% to 5.0% by mid-2020. It was possible that, particularly following the upbeat employment report for August, the Governor may choose to indicate a lower target for the unemployment rate than the 5.0% that has been used in recent Statements. This was not the case and the 5.0% forecast has been retained. Of course, it remains a possibility that this forecast will be lowered in November with the release of the next Statement on Monetary Policy.”


The final paragraph in the Governor’s Statement is identical to the Statement in September, emphasising that progress in reducing unemployment and returning inflation to the target is likely to be gradual.

While markets appear to be pricing in around a 40% probability of a rate hike by end 2019, we remain comfortable with our forecast that rates will remain on hold through 2019 and 2020.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD holds onto gains around 1.1150 amid Brexit, trade headlines

EUR/USD is trading around 1.1150, holding onto gains. The common currency was swept higher with Brexit optimism and after China said concrete progress with the US. The USD remains on the back foot.


GBP/USD tops 1.30 amid upbeat Brexit developments

GBP/USD has topped 1.30, a fresh five-month high, as parliament is set to debate the detailed Brexit bill, with the EU ready to grant an extension. The DUP is set to reject a customs union amendment.


USD/JPY ticks higher, up little around mid-108.00s

The USD/JPY pair edged higher on the first day of a new trading week and is currently placed at session tops, just above mid-108.00s.


Gold: Sidelined near $1,490 after PBOC's rate decision

Gold's struggle for clear directional bias continues after the People's Bank of China's (PBOC) interest rate decision. The yellow metal has been restricted largely to a narrow range of $1,500 to $1,480 since last Monday.

Gold News

Top 3 price prediction BTC, ETH, XRP: Building on future profits

The trading week is kicking off with a continuation of the last week's scenario. The consolidation process continues and deepens, especially in the relationship between Ethereum and Bitcoin.

Read more