RBA on Hold; Unchanged Rhetoric on AUD – Westpac
Bill Evans, Chief Economist at Westpac, suggests that the Australia’s Reserve Bank Board meets next week on April 5 and they expect that the Board will decide to hold rates steady.
“It remains our long held view that the RBA will keep rates on hold for the remainder of 2016.
Steady rates will come as no surprise to markets with the probability of a move that is priced into the curve running at just around 5%.
We have consistently argued that any move from here, at these low rate levels, is only likely to occur at the February, May, August, and November meetings. Those meetings precede the quarterly Statement on Monetary Policy when the Bank can release revised forecasts which are likely to be used to justify any move.
Buying some time before changing the strategy seems like the most prudent approach in the current circumstances. After all, the boost in the AUD has occurred suddenly in the space of just one month and a prudent patient approach seems the more likely policy outcome at this stage.
Accordingly, we do not expect to see any significant changes in the Governor’s Statement next week.”
(Market News Provided by FXstreet)