Researchers at UOB Group assessed the latest RBA meeting, where the central bank left unchanged the key rate at 1.00%.
Key Quotes
“The Reserve Bank of Australia (RBA) kept its official cash rate (OCR) on hold at 1.00%, as expected. Compared to the one in July, the concluding paragraph of today’s accompanying statement was different: “It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target. The Board will continue to monitor developments in the labour market closely and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time”.
“We strongly believe the RBA is on a “wait-and-see” approach for now. The OCR is already at a historic low of 1.00%, and it is unlikely to use its ammunition unnecessarily unless economic conditions deteriorate quickly. Earlier this week, former PM John Howard warned the RBA may have cut interest rates “too far” already, leaving Australia lacking ammunition in the event of another global shock”.
“If any, the re-escalation of trade tensions between the US and China is of a concern. This is hardly surprising given that Australia is the most exposed G10 economy to Chinese imports. As such, external factors will likely be an important catalyst for the RBA. For that, we see the RBA maintaining an easing bias. We could get further details this Friday when the RBA releases its updated quarterly economic forecasts in its Statement of Monetary Policy (SoMP). Shortly before, RBA Governor Philip Lowe will also be delivering his semi-annual testimony to a parliamentary panel in Canberra”.
Share
