16 Feb 2015
RBA expected to adopt an explicit easing bias - Westpac
FXStreet (Barcelona) - Bill Evans, Chief Economist at Westpac, retains his view for a March rate cut from the RBA, and further adds that the central bank is likely to express a dovish bias in tomorrow’s minutes.
Key Quotes
“For now, we are comfortable to maintain our original call for a follow up move in March, particularly given the Bank’s comfort with its initiatives in the regulatory sphere. However we recognize that a perfectly respectable case can be made for the Bank to pause for a month or two to assess developments in the housing market.”
“The most important point is that February is not the end of this rate cycle with another cut extremely likely over the next three months.”
“Consistent with our view that the interest rates are likely to move lower, and as suggested by the Statement on Monetary Policy, we expect the RBA to adopt an explicit easing bias.”
“Indeed, it would not surprise to see the Bank express an easing bias in the Minutes of the February RBA Board meeting, which are to released … on February 17.”
“Recall that in the statement announcing the rate cut on February 6 the Governor focused on explaining the decision but was silent on forward guidance. The Minutes have in the past been a vehicle for providing more detail around the Board's decision and there are precedents for the Minutes to provide a better insight into the bias of the RBA.”
“Fostering expectations that domestic interest rates are likely to move lower is a key mechanism for maintaining downward pressure on the Australian dollar, particularly in an environment where a number of other central banks are actively easing monetary policy.”
Key Quotes
“For now, we are comfortable to maintain our original call for a follow up move in March, particularly given the Bank’s comfort with its initiatives in the regulatory sphere. However we recognize that a perfectly respectable case can be made for the Bank to pause for a month or two to assess developments in the housing market.”
“The most important point is that February is not the end of this rate cycle with another cut extremely likely over the next three months.”
“Consistent with our view that the interest rates are likely to move lower, and as suggested by the Statement on Monetary Policy, we expect the RBA to adopt an explicit easing bias.”
“Indeed, it would not surprise to see the Bank express an easing bias in the Minutes of the February RBA Board meeting, which are to released … on February 17.”
“Recall that in the statement announcing the rate cut on February 6 the Governor focused on explaining the decision but was silent on forward guidance. The Minutes have in the past been a vehicle for providing more detail around the Board's decision and there are precedents for the Minutes to provide a better insight into the bias of the RBA.”
“Fostering expectations that domestic interest rates are likely to move lower is a key mechanism for maintaining downward pressure on the Australian dollar, particularly in an environment where a number of other central banks are actively easing monetary policy.”