We looked at what we found since the previous meetingAnd used that to ask the question whether the current policy stance is appropriate or notThe discussion was mostly about the economic changes and the impact on inflationWe have done some scenario analysis on potential Trump policy changesIt depends on what he says he will do and how other countries react to tariffsIt may not impact Australia greatly but it may impact us if there is impact to ChinaWe’re still in wait and see mode thoughThe point of today’s statement is to let people know that we have noticed the changes in the dataNeed to be alert of what the data in the next month means on inflation outlook before February meeting
Bullock maintains that underlying inflation remains too high but at the same time when asked about rate cuts in the near-term, she did not outright shoot that idea down either. She just maintained that they will continue to look at the data and assess their views accordingly based on that.
Traders are now pricing in ~56% odds of a 25 bps rate cut for February next year. But if the data continues to soften ahead of that, expect markets to ramp up the pricing and in turn put more pressure on the aussie currency.
This article was written by Justin Low at www.forexlive.com.
