7 Apr 2015
RBA keeps rates unchanged, affirms easing bias – TDS
FXStreet (Barcelona) - The TD Securities Team reviews the RBA rate decision and other data releases in Australia, noting that the central bank has maintained an easing bias, with markets now expected to price in a rate cut in May.
Key Quotes
“The RBA kept the cash rate on hold at 2.25% as we expected with the Bank affirming its bias to ease rates further if appropriate.”
“A new line in today’s statement is the pick up in lending to businesses, which we think is a nod to the Feb rate cut as having worked.”
“Also the RBA has removed reference to the AUD being above ‘fundamental value’ consistent with RBA papers from the end of Feb that revealed the RBA believed the AUD near US$0.7650 was near fair value.”
“We believe the market will move towards pricing in a May cut (our base case) but today’s statement suggests this is not necessarily a done deal.”
“Retail Sales for Feb rose +0.7%/m vs expectations for a +0.4%/m rise. Also Jan was revised up from +0.4% /m to +0.5%/m. Today’s data reveals that all sectors and states saw a pick up in sales in Feb, coinciding with the jump in consumer confidence after the RBA’s Feb rate cut. Based on today’s numbers we forecast Q1 consumption to be up +1%/qtr, potentially adding +0.5% pts to Q1 GDP.”
“ANZ’s March job ads fell –1.4%, from a +0.7% rise in Feb. This is the first time that job ads fell in 9 months with declines registered across internet –1.3%/m and newspapers –3.6%/m.”
Key Quotes
“The RBA kept the cash rate on hold at 2.25% as we expected with the Bank affirming its bias to ease rates further if appropriate.”
“A new line in today’s statement is the pick up in lending to businesses, which we think is a nod to the Feb rate cut as having worked.”
“Also the RBA has removed reference to the AUD being above ‘fundamental value’ consistent with RBA papers from the end of Feb that revealed the RBA believed the AUD near US$0.7650 was near fair value.”
“We believe the market will move towards pricing in a May cut (our base case) but today’s statement suggests this is not necessarily a done deal.”
“Retail Sales for Feb rose +0.7%/m vs expectations for a +0.4%/m rise. Also Jan was revised up from +0.4% /m to +0.5%/m. Today’s data reveals that all sectors and states saw a pick up in sales in Feb, coinciding with the jump in consumer confidence after the RBA’s Feb rate cut. Based on today’s numbers we forecast Q1 consumption to be up +1%/qtr, potentially adding +0.5% pts to Q1 GDP.”
“ANZ’s March job ads fell –1.4%, from a +0.7% rise in Feb. This is the first time that job ads fell in 9 months with declines registered across internet –1.3%/m and newspapers –3.6%/m.”