12 May 2015
RBA might cut rates again this year – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, views that it is soon to write-off a rate cut risk by the RBA, in spite of Governor Steven’s removing the ‘further easing of policy ‘ statement from the recent policy statement, forecasting two more rate cuts in 2015.
Key Quotes
"Last week’s 25 bp rate cut from the RBA may not have gone according to plan. The value of AUD/USD has edged higher since the May 5 meeting partly because USD bulls have lost faith but partly because the market now has the impression that last week’s rate cut from the RBA may have been the last of the cycle.”
“According to a Bloomberg survey conducted between May 7 and May 11, RBA rates are now expected to be on hold until Q3 2016 when there will be a modest hike. Of the 29 forecasters only 6 see scope for further rate cuts.”
“Some of the hawkishness is reportedly derived from the decision by RBA Governor Stevens to omit from last week’s policy statement the words “further easing of policy may be appropriate over the period ahead” that were used to stress the Bank’s dovish tone in March.”
“In our view, however, it is too soon to write-off rate cut risk from the RBA. We doubt if the moderate rise in Australia’s effective exchange rate this year will be welcomed by the central bank and in view of the loss of bullish USD momentum, there is arguably even more reason for the RBA to reassert a dovish position in the coming weeks.”
Key Quotes
"Last week’s 25 bp rate cut from the RBA may not have gone according to plan. The value of AUD/USD has edged higher since the May 5 meeting partly because USD bulls have lost faith but partly because the market now has the impression that last week’s rate cut from the RBA may have been the last of the cycle.”
“According to a Bloomberg survey conducted between May 7 and May 11, RBA rates are now expected to be on hold until Q3 2016 when there will be a modest hike. Of the 29 forecasters only 6 see scope for further rate cuts.”
“Some of the hawkishness is reportedly derived from the decision by RBA Governor Stevens to omit from last week’s policy statement the words “further easing of policy may be appropriate over the period ahead” that were used to stress the Bank’s dovish tone in March.”
“In our view, however, it is too soon to write-off rate cut risk from the RBA. We doubt if the moderate rise in Australia’s effective exchange rate this year will be welcomed by the central bank and in view of the loss of bullish USD momentum, there is arguably even more reason for the RBA to reassert a dovish position in the coming weeks.”