A view on whats to come from the Reserve Bank of Australia
This is via @AntBarton89. Antony has posted it to the LiveSquawk Message Board, from where I have, err, liberated it! For goodness sake, don't mention this to LiveSquawk! Ssshhhhh (but you may as well give their free trial a go, its free .... :-D )
Says BoA/ML (bolding is mine):
- We see a big hurdle for future the RBA easing in coming months stemming from domestic economic conditions.
- GDP came in at the upper range of the RBA's forecast, at 2.5-3.5% yoy, and while we expect growth to slow over 2017, it is still likely to sit within the RBA's forecast range (also at 2.5-3.5%).
- The RBA's statement from the September board meeting, this week, confirmed this view with no guidance given and no specific mention of the May and August rate cuts that will support growth.
- We continue to expect that the RBA will remain on hold for the rest of year, despite the likelihood that Q3 CPI will print below the RBA's target band.
- We retain our call for another 25bp cut in early 2017 but note that with dwelling construction now likely to support growth for longer than we had previously expected this presents a less strong case for easing from the domestic economic perspective.
- However, external risks may offset this if broader financial conditions tighten via the currency channel if other central banks extend easier policy or if the Federal Reserve fails to hike rates by the end of the year.
