RBA keeps rates on hold, no significant change in commentary - Westpac

Bills Evans at Westpac presents the review of RBA’s latest monetary policy decision, where the central bank left the cash rates unchanged at 1.5%.

Key Quotes:

“We are not surprised by this decision and Statement. It is entirely consistent with our view that rates will remain on hold for the remainder of this year and over the course of 2017.”

“As we have discussed in previous notes the inflation outlook is unlikely to be the source of any future policy adjustment.”

“The policy easing in 2016 has been in response to the inflation shock earlier in the year but now policy is likely to refocus on the real economy.”

“Our current forecast of 3.3% growth next year, supported by 1.6% growth in employment, is unlikely to signal the need for lower rates.”

“However, with inflation only likely to track along the bottom of the 2-3% target band next year there will be scope to ease further should growth, and the labour market in particular, profoundly disappoint.”

“That is not our forecast but we acknowledge that if rates are to move next year it will be down rather than up in 2017.”