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Greg Gibbs, founder, analyst, & PM at Amplifying Global FX Capital Pty Ltd an Australian financial services company, explained that  the RBA policy statements next week may reveal little change in its policy outlook.  

Key Quotes:

  • “However, there is a risk that they sound somewhat less confident about the outlook for growth, considering some acceleration in the decline in housing activity, some moderation in business surveys, some intensification of risks related to US-China trade relations, and a sustained lift in bank-funding costs over the cash rate since early in the year.”
  • “The RBA is unlikely to make significant changes to its key forecasts, but there is scope for the market to react to even subtle changes in the messages from the RBA.”
  • “In its May Statement on Monetary Policy, the RBA said, “For some time the Reserve Bank Board’s view has been that holding the cash rate steady at 1 ½ per cent would assist that progress, with steady monetary policy promoting stability and confidence. If the economy continues to perform as expected, higher interest rates are, however, likely to be appropriate at some point. Notwithstanding this, the Board does not see a strong case for a near-term adjustment in the cash rate.”
  • “The key message here is steady she goes, with an expectation that rates will rise at some point.  If the RBA were to drop the reference for a hike “at some point” it would be viewed as a dovish tilt.”