Analysts at Nomura offered the statement highlights from yesterday's RBA event.
- "• A benign and intact central case. The RBA continues to project GDP growth of a little above 3%, strong employment growth and a gradual rise in wages and inflation.
- • A softer tilt on the global backdrop. With the passage of time and some softer global growth data over the past month or two, the RBA has felt it necessary to remove its observation that “the global economy has strengthened over the past year” and replaced this with “the global economic expansion is continuing”; this represents a shift from the second derivative (the pace of growth has accelerated) to the first derivative (growth is continuing). It also noted international trade uncertainties and “strains in a few emerging market economies”, perhaps a little more strongly.
- • Higher short-term wholesale interest rates over recent months. We believe comments here indicate a little more concern and uncertainty than previously expressed. The governor noted that this rise was “only partly” due to US developments – as we have been noting – and added that “it remains to be seen the extent to which these factors persist”, indicating less certainty.
- • A small tweak to the AUD comment. For many months the RBA has noted that an appreciating exchange rate would be expected to result in a slower pick-up in activity and inflation. Likely due to the recent decline in AUD, it today removed this statement. We continue to believe that the RBA is comfortable with the current level of the currency.
- • A few slightly softer words on housing. While the RBA appears relaxed about the continuing, gradual, softening in the housing market, its acknowledgement today that housing credit growth had “declined” and that investor demand had “slowed noticeably” does look a little softer than the sentiment expressed a month ago.
- • Concluding paragraph again repeated verbatim. The RBA continues to judge that holding the cash rate unchanged today is consistent with achieving its inflation and unemployment rate objectives over time."
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