David Plank, head of Australian economics at ANZ, points out that the RBA has delivered the second of the two rate cuts assumed in its May forecasts.
Key Quotes
“The reasons for the rate cut are exactly as in June:
Today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.”
“There has been a change with the final, forward looking, part of the statement however. The words “if needed” have been added (our emphasis):
The Board will continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time.”
“While this change is subtle, we think it reflects the fact that with rates 50bp lower the case for further easing is not necessarily as pressing as it was. The RBA will decide on the need for more easing when it finalises its forecasts for the August Statement of Monetary Policy.”
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