RBA expected to maintain the ‘wait-and-see’ mode – UOB

In opinion of Lee sue Ann, Economist at UOB Group, the RBA should refrain from acting on interest rates for the time being.

Key Quotes

“The Reserve Bank of Australia (RBA) kept its official cash rate (OCR) at 0.75%. The accompanying statement stuck very much to recent themes…”.

“The RBA’s decision to pause following October’s cut to a record-low was largely expected, given the slight uptick in inflation, the modest improvement in the labour market, and a rebound in the housing market”.

“Earlier today, Federal Treasurer Josh Frydenberg said there were no plans to push for a lower inflation target band under the monetary policy agreement between the government and the nation’s central bank”.

“The next RBA meeting is on 3 December, a day before 3Q19 GDP data is due for release. By then, the RBA will have only received additional labour market information (October data will be due on 14 November). For now, there are good reasons for the RBA to maintain a “wait-and-see” approach as it monitors the impacts of the three rate cuts so far this year. Potential progress on the US-China trade negotiations front will also be closely watched, whilst the Fed’s signal that it is done with easing for now lessens some pressure for the rest of the central banks around the world. The next focus will be on the RBA’s Statement of Monetary Policy (SoMP), due this Friday (8 November), whereby the RBA is expected to cut its quarterly forecast for GDP growth once again”.