The Reserve Bank of Australia left the cash rate unchanged yesterday, as widely expected:
RBA leaves cash rate unchanged at 4.35%, as expectedRBA’s Bullock: We did not consider the case for a rate cut todayRBA’s Bullock: We need a lot to go our way to bring inflation back to range
Via Westpac, a recap, in brief from a much longer report:
The RBA is more alert and less confident in its inflation fight.
the RBA Board left the cash rate on hold after only considering a rate hike or staying the course. That is, a rate cut was not discussed. What’s more, the tone of the statement and rhetoric from the RBA Governor Michele Bullock suggested a step up in concerns around upside inflation risks, despite repeating the now familiar mantra of not ruling anything in or out.
In perhaps one of the more telling remarks of the press conference, Governor Bullock said “we need a lot to go our way if we are going to bring inflation down to the 2-3% target” and the economy’s narrow path is “getting a bit narrower.”
Tough talk from the RBA and Governor Bullock is not misplaced. Its better to sound hawkish, this in itself can count some way towards a tighter policy. On the other hand, sounding dovish can have an easing impact, at the margin.
AUD/USD update, helped by a softer US dollar.
This article was written by Eamonn Sheridan at www.forexlive.com.
