17 Mar 2015
RBA minutes reveal the central bank maintains a clear easing bias – TDS
FXStreet (Barcelona) - The TD Securities Team shares the key points from the RBA Minutes released today, noting that the central bank remains in favour of further easing.
Key Quotes
“Minutes of the RBA Board meeting held earlier this month were released. There were two key points of interest for the market. First was gauging the RBA’s appetite to deliver further cuts. Second was determining whether the run up in house prices and record auction clearance rates were a reason for the Board keeping rates on hold two weeks back.”
“The minutes reveal the Bank to have a clear easing bias (“...further easing over the period ahead may be appropriate…”). However the Bank’s decision to keep rates on hold was to allow “some time for the structure of interest rates and the economy to adjust to the earlier change”.”
“There were also “….advantages in receiving more date to indicate whether or not the economy was on the previously forecast path.” So the RBA is clearly in no urgent need to cut rates.”
“Data since the RBA’s meeting two weeks ago has not been sufficiently weak to favour the Bank cutting rates next month, so the earliest the Bank is likely to cut again is May (TD’s house view).”
“On Australian property, the RBA did not appear overly concerned with the strength in house prices, highlighting that ex Sydney/Melbourne, house prices are up +3%/yr. The RBA suggested the Feb rate cut would boost house prices “at the margin” and that while household leverage had not increased significantly, that the Bank would continue to work with regulators to contain risks from the housing market.”
“The RBA reiterated the AUD remained ‘above most estimates of fundamental value.’”
Key Quotes
“Minutes of the RBA Board meeting held earlier this month were released. There were two key points of interest for the market. First was gauging the RBA’s appetite to deliver further cuts. Second was determining whether the run up in house prices and record auction clearance rates were a reason for the Board keeping rates on hold two weeks back.”
“The minutes reveal the Bank to have a clear easing bias (“...further easing over the period ahead may be appropriate…”). However the Bank’s decision to keep rates on hold was to allow “some time for the structure of interest rates and the economy to adjust to the earlier change”.”
“There were also “….advantages in receiving more date to indicate whether or not the economy was on the previously forecast path.” So the RBA is clearly in no urgent need to cut rates.”
“Data since the RBA’s meeting two weeks ago has not been sufficiently weak to favour the Bank cutting rates next month, so the earliest the Bank is likely to cut again is May (TD’s house view).”
“On Australian property, the RBA did not appear overly concerned with the strength in house prices, highlighting that ex Sydney/Melbourne, house prices are up +3%/yr. The RBA suggested the Feb rate cut would boost house prices “at the margin” and that while household leverage had not increased significantly, that the Bank would continue to work with regulators to contain risks from the housing market.”
“The RBA reiterated the AUD remained ‘above most estimates of fundamental value.’”