3 Feb 2015
RBA to cut today, in a line-ball decision - Nomura
FXStreet (Bali) - The RBA Board is expected to cut the interest rate by 25bp today, although the probability of a move being only a little above 50%, Andrew Ticehurst, Asia Rates Strategist at Nomura.
Key Quotes
"The RBA Board meets on Tuesday 3 February, amid unusually intense media and market speculation. On balance, we expect a 25bp reduction in the cash rate, although we acknowledge that this will be a line-ball decision and we assess the probability of a move as being only a little above 50%."
"However, if the RBA chooses to hold off in February, then the probability of a move in March rises, and we expect an additional 25bp cut in Q2 (see We forecast 50bp of RBA cuts in H1, 22 January 2015). There are risks to our call of an imminent rate cut, notably the impact of the lower AUD, and its dramatic recent increase in volatility, financial stability concerns and the RBA’s forward guidance, which we discuss below.
Key Quotes
"The RBA Board meets on Tuesday 3 February, amid unusually intense media and market speculation. On balance, we expect a 25bp reduction in the cash rate, although we acknowledge that this will be a line-ball decision and we assess the probability of a move as being only a little above 50%."
"However, if the RBA chooses to hold off in February, then the probability of a move in March rises, and we expect an additional 25bp cut in Q2 (see We forecast 50bp of RBA cuts in H1, 22 January 2015). There are risks to our call of an imminent rate cut, notably the impact of the lower AUD, and its dramatic recent increase in volatility, financial stability concerns and the RBA’s forward guidance, which we discuss below.