RBA to leave the cash rate unchanged at 1.5% – TDS

Analysts at TD Securities and unanimous consensus expect the RBA to leave the cash rate at 1.5% tommorow.

Key Quotes

“Friday’s Bloomberg poll confirmed that the median forecast is flat at 1.5% through to mid-2019. OIS is 30% priced for a May 2019 hike (TD’s base case).”

“The RBA tends to be glass half full for the global growth backdrop and domestic activity. For a tightening bias we need wages growth closer to 3%/y and underlying inflation closer to 2 ½%/y.”

“The RBA in July noted the build-up in trade tensions beyond US-China and dismissed elevated funding costs as seasonal. The July Minutes claimed that the AUD was “within recent ranges”. We expect a repeat.”

“After noting 1.9%/y Q2 core inflation and decent Q2 retail sales, the next RBA data hurdle is Q2 wages on August 15.”