RBA to reintroduce strategy of ‘talking down’ the Aussie? – Westpac

By FXStreet Bill Evans, Chief Economist at Westpac, expects that the RBA Board will decide to hold rates steady today, although he notes that the Governor will certainly discuss reintroducing the strategy of “talking down” the AUD.

Key Quotes

“It remains our long held view that the RBA will keep rates on hold for the remainder of 2016. Steady rates will come as no surprise to markets with the probability of a move that is priced into the curve running at just around 5%.”

“We have consistently argued that any move from here, at these low rate levels, is only likely to occur at the February, May, August, and November meetings. Those meetings precede the quarterly Statement on Monetary Policy when the Bank can release revised forecasts which are likely to be used to justify any move.”

“Market probabilities for the next “live” month, May, are only around 25%. A complication for the meeting in May is that it will now coincide with the release of the Federal Budget rather than precede the Budget by one week. The market based probability of a cut by June has moved to 40% with a 100% probability of a cut priced in for December.”

“By far the most important issue …read more

Source:: FX Street