According to the most recent Quick Reaction by ANZ, the minutes of the latest RBA meeting suggest that the central bank remains in “wait-and-see mode” to gauge the impact of the May and August rate cuts on the economy.
Felicity Emmett, head of Australian economics at ANZ, said that the Board’s characterisation of the housing market continues to be one of “easing conditions”.
“Notwithstanding the RBA’s inflation forecasts pointing to an easing bias, our central case remains that rates will stay on hold at 1.5 per cent,” she commented.
“This assumes that the Q3 Consumer Price Index will show underlying inflation broadly in line with the RBA’s forecast trajectory, where we think a solid downward surprise would be required to prompt another rate cut."
ANZ also noted that the trajectory of the Australian dollar also remains important to the RBA’s deliberations, where it expects a slow depreciation.
Looking forward, ANZ said that new RBA governor Phillip Lowe’s parliamentary appearance tomorrow morning is likely be of interest to markets.
“We expect that [Mr] Lowe will be relatively upbeat in his assessment of the economy reflecting assistant governor’s Chris Kent’s relatively positive speech last week and the general tone of recent RBA communications,” Ms Emmett said.
[Related: New RBA deputy governor appointed]