AUD: Rates likely on hold despite weak GDP numbers – Westpac

By FXStreet FXStreet (Delhi) – Bill Evans, Chief Economist at Westpac, suggest that the RBA is likely to maintain its status quo on rates despite the recent weak GDP data.

Key Quotes

“GDP report was undoubtedly weak, with annual growth slowing from 2.3% to 2%. Consumer spending growth remained stubbornly weak (0.5% for the quarter) despite the lead from real retail sales which increased by 0.8%.”

“The question is whether this disappointing result will be enough to move the Reserve Bank to cut rates further by the end of this year. Note that markets are pricing in a near 100% probability of a rate cut by December.”

“With only two more employment reports set to be released before the November Board meeting, and the AUD highly unlikely to stage much of a comeback over the next few months, the prospects for the Bank to change rates according to the market’s timetable seem remote.”

“For now we retain our call that rates will be on hold for the remainder of this year and 2016, but will continue to stress test our commodity views with China’s construction cycle; global growth in general; and the production plans of the major iron ore and coal producers being centre stage.”
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Source:: FX Street