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5 Feb 2015
RBA and a probable rate cut in May – TDS
FXStreet (Edinburgh) -Strategists at TD Securities assessed the probable outcome of the RBA Statement on Monetary Policy due tomorrow.
Key Quotes
“After the “surprise” 25bp cash rate cut delivered earlier this week, we all want to know exactly why due process was abandoned, and we expect this document to answer a lot of unanswered questions”.
“The RBA communiqué on Tuesday (page 2) appeared to ‘reluctantly’ justify a cut, supported by 'sub-trend growth for somewhat longer' and a higher u-rate”.
“We expect the SoMP to pave the way for on hold at 2.25% and a “proper” easing bias in March. We pencil in May for the next –25bp to 2% to allow digestion of the first rate cut, monitor offshore events and peer at any post-cut reaction”.
“Also, it allows for an announcement by APRA to tighten up lending criteria, i.e. macroprudential tools, to allow for further easing without re -fuelling the house price cycle”.
Key Quotes
“After the “surprise” 25bp cash rate cut delivered earlier this week, we all want to know exactly why due process was abandoned, and we expect this document to answer a lot of unanswered questions”.
“The RBA communiqué on Tuesday (page 2) appeared to ‘reluctantly’ justify a cut, supported by 'sub-trend growth for somewhat longer' and a higher u-rate”.
“We expect the SoMP to pave the way for on hold at 2.25% and a “proper” easing bias in March. We pencil in May for the next –25bp to 2% to allow digestion of the first rate cut, monitor offshore events and peer at any post-cut reaction”.
“Also, it allows for an announcement by APRA to tighten up lending criteria, i.e. macroprudential tools, to allow for further easing without re -fuelling the house price cycle”.