16 Jul 2013
Flash: RBA’s minutes provide colour on AUD– TD Securities
FXstreet.com (London) - Research teams at TD Securities noted that the minutes of the RBA’s July Board meeting, where it left the cash rate unchanged at 2.75% for the second consecutive month provided more colour around the lower AUD and its impact on inflation.
“The exchange rate is still characterised as “high” and inflation is still expected to be consistent with target, however, the Board did note that the AUD depreciation “was expected to add a little to inflation over time”, and that the inflation outlook is “slightly higher because of the exchange rate depreciation”. These specific risks were absent in the board communiqué”. They continued to say that the less-dovish Minutes do rule out an August rate cut per se, but it does dilute the urgency for a near-term rate cut at the margin. “We prefer November for August for our final 25bp cut for this easing cycle”.
“The exchange rate is still characterised as “high” and inflation is still expected to be consistent with target, however, the Board did note that the AUD depreciation “was expected to add a little to inflation over time”, and that the inflation outlook is “slightly higher because of the exchange rate depreciation”. These specific risks were absent in the board communiqué”. They continued to say that the less-dovish Minutes do rule out an August rate cut per se, but it does dilute the urgency for a near-term rate cut at the margin. “We prefer November for August for our final 25bp cut for this easing cycle”.