The news hit yesterday that the controversial reforms to the RBA would be going ahead:
Australia’s government has secured support from Greens party to pass RBA reform law
For a rundown on what the reforms are, check this out:
Reminder of what this is all about
Reuters have a piece up saying:
Australian central bank reform adds new wrinkle to policy outlook
In brief:
Australia’s central bank is finally getting a major shake-up
changes include splitting the current RBA board into two groups with one dedicated to monetary policy and the other focusing on the central bank’s governance and operations.
Analysts are assuming the new monetary policy committee would have some new members, perhaps changing the outlook for interest rate cuts.
And cites Goldman Sachs:
“While our base case remains for the RBA to start cutting
rates in February, the changes raise the uncertainty around the
RBA’s reaction function going forward given potential new board
personnel”
I agree there will be some new uncertainty, but I think its fair to say that the Bank won;t be cutting in February. Reserve Bank of Australia Governor Bullock spoke overnight:
ICYMI – RBA Gov Bullock ruled out a rate cut
Current cash and inflation rates from the RBA website.
This article was written by Eamonn Sheridan at www.forexlive.com.
