Decision, summary of statement and link to full text is here
ANZ’s Warren Hogan:
- RBA states a period of stability in rates is likely. ANZ expects the next move in rates is up in early 20015. Risk is for a move later this year
- RBA removed reference to AUD being too high (although they would like to see a sub 90c rate sustained).
- RBA keeps rates on hold at 2.5%. Easing bias dropped (as expected). Inflation surprised them in Q4 and activity looks better.
AMP Capital Shane Oliver:
- RBA appears to have moved to a neutral bias by referring to a period of stability in rates.Our view remains on hold at least out to September
- RBA has also softened its stance on the $A by deleting reference to it being “uncomfortably high”. This plus neutral bias has seen $A upJust like the Fed, no reference to emerging mkts from #RBA. Could be they just don’t see it as a new risk
David Scutt, Arab Bank:
- You’ll struggle to find a more-neutral sounding policy statement than this
Bill Evans, Westpac:
- the Bank has abandoned its ‘soft’ easing bias and adopted a clear neutral bias. That is evidenced by the final sentence in the Governor’s statement: “On present indications, the most prudent course is likely to be a period of stability in interest rates”.
- The other major development in this statement is the discussion around the Australian dollar… no reference to the level of the currency in this statement. The motive behind desisting from further talking down of the currency may be partially due to the lift in tradeable inflation in the December quarter
- Commentary around the real economy highlights the diverse developments which are now becoming apparent.
- The Bank is clearly careful to emphasise that there is no case for higher rates. Indeed the outlook continues to be for below trend growth and rising unemployment.
- Now looking at an extended period of steady rates
- our own view that rate cuts are more likely … Our current view is for a move in August to be followed up with a further move later in the year.
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I’ll update as more comes
ps. James Glynn at the Wall Street Journal has this: Australia Central Bank Signals End to Cuts (may be gated). Glynn wrote the article I discussed here, in which he said: “The bottom line: When the RBA convenes Feb. 4 for its first meeting in nearly two months, it’s likely to conclude there’s no place for more cuts.”. Spot on.
MNI’s assessment: RBA Keeps Rate Unchanged But Signals Shift To Neutral Stance
- In statements in the recent past, the RBA didn’t provide any explicit rate bias in the statement, but the tone of the statement was towards easing. Tuesday’s statement was more explicit as the RBA said “on present indications, the most prudent course is likely to be a period of stability in interest rates.”
- An important change in the statement was the removal of “uncomfortably high” description for the Australian dollar.
