Australian Herald-Sun RBA watcher Terry McCrann is out with his post-RBA report and writes that the central bank will remain on hold for the foreseeable future. Beyond that it depends on how growth in the US and China develops.
Right now, not even RBA insiders though, would be prepared to predict in which direction that move — when it ultimately came — would be.
They are more than happy to be leaving rates unchanged. And that further, right now, the mix of factors that go into a rate decision are almost ‘Goldliocks-style’ enabling, indeed even locking in, that stance.
While the RBA broadly sees the world developing positively — and so that it would expect to eventually have to lift rates, and indeed, would positively want to get to that position — it would not though ‘bet the bank’ far less the Australian economy on that expectation being a certainty.
McCrann noted one change in the RBA statement where they said the Aussie was strong “particularly given the further decline in commodity prices.” He doesn’t see any credible threat of action.
The RBA has long wanted to see the Aussie fall below US90c — preferably to the US80-85c level, to provide some further stimulus to the economy.
But it is not going to actively jawbone that, because such jawboning only has credibility when backed by the threat of a rate cut — something the RBA does not want.
Meanwhile The Australian reports that the RBA was a bit more optimistic than expected and says the rates market is looking for a hike in early 2015.
