TD Securities analysts note that the RBA left its cash rate unchanged at 0.75% in line with theirs and market expectations, noting that they prepared to ease further if needed.

Key Quotes

“The statement was a little more constructive than in the November meeting, with RBA noting that the risks to the global economy have lessened recently, while expectations of global easing have been scaled back and financial market sentiment has improved.”

“RBA repeated that Australia's economy has reached a gentle turning point, but uncertainty remains on the outlook for consumption. Once again they note that a lift in wages would be welcome and help push inflation into a 2-3% range. Lower rates may be needed to achieve this in our view.”

“RBA noted the turnaround in established housing markets but that housing credit remains low. RBA highlights the "long and variable" lags in monetary transmission, again suggesting that they want to assess the impact of previous cuts before moving again. There is little here to change the view that the next move is down and a Feb cut still appears likely, but for now RBA is in wait and see mode.”

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