Dovish RBA highlighting the risks – ANZ

By FXStreet FXStreet (Guatemala) – While the RBA has left the cash rate unchanged at 2% yesterday, it has joined the ranks of the RBNZ and the ECB with the post-meeting statement suggesting an easing bias, highlighting a number of emerging risks on the horizon.

Key Quotes:

“The comments on the international economy were softer, and there seemed to be some scepticism about the sustainability of the recent labour market strength. For us, the language on inflation was different from its last communications, with the bank characterising inflation as “quite low” and “likely to remain low over the next year or two”.

The Bank is clearly cognisant of the emerging risks and ready to act if need be. The last paragraph reiterated the Bank’s easing bias, with the comment that “continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand.

We expect that later in the year, ongoing low inflation and a softening conditions, especially in the labour intensive housing sector, are likely to push the RBA over the line.

Both the RBA and RBNZ will, this week, be providing further colour on the domestic economic outlook and emerging global risks and what this could mean …read more

Source:: FX Street