Bill Evans, Research Analyst at Westpac, notes that the Australian Reserve Bank Board today decided to leave the cash rate unchanged at 1.50% at its December board meeting, making it twenty-six consecutive meetings that rates have been on hold.
Key Quotes
“Clearly, developments in global trade are tempering the Bank’s views on the global economy. In November, the Governor referred to “uncertainty from the direction of international trade policy in the United States”. In this Statement, he is much more explicit noting “there are, however, some signs of a slowdown in global trade partly stemming from ongoing trade tensions”.”
“The positive growth forecasts of 3 ½ per cent (average over 2018 and 2019) are confirmed. The positive business conditions and rising levels of public infrastructure expenditure are noted. On the other hand, uncertainty around the outlook for household consumption remains an issue.”
“With the increase in the AUD since the last meeting (trade weighted index up 1 ½ per cent), the sentiment “the Australian dollar remains within the range that it has been in over the past two years on trade-weighted basis” persists. Although in November it was described as being in the lower part of the range.”
“We continue to expect that the cash rate will be on hold through 2019 and 2020.”
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