Gotta say, I'm not a fan of 'certainty' in the financial markets. But in the case of the Reserve Bank of Australia meeting today, yeah, time to make an exception.
The comment is from Westpac's preview of the meeting: The Board is certain to hold rates steady.
Its not a new view from WPAC, they've been consistently saying since May last year that, after an expected cut in August 2016, rates would be held steady for the remainder of 2016 and 2017. Earlier this year we extended that view with the expectation that the Bank would also hold rates steady through 2018
And, they've been spot on.
Anyway, a couple of good points made by WPAC in the remainder of their piece, in summary and bolding mine:
- key news (for the RBA) have been around the employment report and the inflation report
- the employment report may have been somewhat welcome
- spectre of spare capacity in the economy weighing on inflation; labour markets and wages would still be a concern
- situation around housing markets is more unclear
- The last time macro prudential policies were adopted, in 2015, they were very successful in slowing house price growth ... impact was curtailed by the May and August rate cuts in 2016
- Our call for steady rates assumes the persistence of the excess capacity in goods; services; and labour markets as exemplified in recent data releases without any threatening collapse in house prices - rather a gradual slow down through the remainder of2017 and 2018. A sharp retraction along the lines of 2016 is still highly unlikely to draw further rate cuts from the Bank given the experience of 2016/17
