RBA: Deputy Gov. Debelle quelled excitement about hawkish turn - TDS

In view of analysts at TDS, RBA Deputy Governor Debelle’s speech today quelled any excitement about a hawkish turn by the RBA.

Key Quotes

“In particular, he emphasized that “no significance should be read into the fact the neutral rate was discussed at this particular meeting”, disappointing those with the view that discussion of the neutral rate in July’s minutes was a prelude to possible rate hikes. In addition, he mentioned that given Australia’s policy rate did not decline to very low levels as in other parts of the world, the fact that other central banks may increase their policy rates does not automatically mean that the Aus cash rate needs to increase.”

“Otherwise, the speech revolved around common global factors leading to easing conditions and why the neutral rate in Australia has declined in recent years. During the Q&A, Debelle repeated the RBA’s standard response that a stronger currency is complicating the economy adjustment. Overall, Debelle’s quick response to recent market moves (in contrast to Poloz at the BoC) suggests the RBA is not in a rush to hike.”