RBA subtly joins the dovish chorus – UBS

By FXStreet FXStreet (Córdoba) – The Reserve Bank of Australia (RBA) held the cash rate unchanged at 2%, as expected. According to the UBS team, the statement was more dovish although the change on the RBA language has been more subtle than other banks. After the decision, UBS retains its bearish stance on AUD/USD targeting 0.65 on a six and 12-month basis.

Key Quotes

“Its comments in the accompanying statement had few surprises, although inflation and domestic demand were the clear touch points for Governor Glenn Stevens. By nature, we saw the statement as destined to sound more dovish given how global sentiment has evolved so far this year, mostly due to the recent equity market selloff, and softer activity data from China. The RBA now recognizes the global economy is more-than likely to expand ‘at a slower pace than earlier expected’.”

“While many central banks have used January meetings to signal or reinforce further easing measures, the RBA was far more cautious in its tone and changes to the RBA’s language far more subtle. For example, the RBA now says ‘Continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand,’ whereas the December statement indicated ‘the …read more

Source:: FX Street