RBA: No fireworks offered - TDS

Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities, notes that the RBA left the cash rate at 1.5% today and thereby continuing the record-breaking run of no adjustment.

Key Quotes

“Providing stability is the Bank's preferred stance, as well as welcoming a weaker AUD as the US Fed hiking cycle continues unabated.”

“The RBA remains upbeat and confident that inflation will return to target. The Bank also continues to downplay the recent lift in mortgage rates where "... [some lenders] have increased their standard variable mortgage rates by small amounts, while at the same time reducing mortgage rates for some new loans".”

“OIS is flat at 1.5%, then ~58% priced for +25bp by Nov 2019.”

“Consensus expects the RBA to lift the cash rate to 1.75% in Q4 2019, and so these monthly meetings 'should' be non-events for quite some time.”

“Only material downside surprises to wages and CPI will prompt us to drop our May 2019 hike.”