2 May 2016
RBA: Weaker than expected inflation raises rate cut hopes - BBH
Research Team at BBH, suggests that the Reserve Bank of Australia will make its policy announcement early on May 3 in Sydney.
Key Quotes
“A weaker than expected Q1 CPI report (1.3% vs. 1.7% in Q4 15) spurred speculation of a rate cut. We are less convinced but see risk of a rate cut later this year. In recent months, the RBA has recognized that subdued price pressures give it scope to ease policy should it be necessary to provide greater monetary accommodation.
The Q1 CPI creates more scope but not necessarily a greater need. The RBA may not have a sense of urgency. Like other central banks who have met recently, watch-and-wait stance may be infectious. Several hours before the RBA's decision, March retail sales will be reported, and the median estimate is for a 0.3% rise after a flat reading in February. The 0.3% increase would match the six, 12, and 24-month averages.”
Key Quotes
“A weaker than expected Q1 CPI report (1.3% vs. 1.7% in Q4 15) spurred speculation of a rate cut. We are less convinced but see risk of a rate cut later this year. In recent months, the RBA has recognized that subdued price pressures give it scope to ease policy should it be necessary to provide greater monetary accommodation.
The Q1 CPI creates more scope but not necessarily a greater need. The RBA may not have a sense of urgency. Like other central banks who have met recently, watch-and-wait stance may be infectious. Several hours before the RBA's decision, March retail sales will be reported, and the median estimate is for a 0.3% rise after a flat reading in February. The 0.3% increase would match the six, 12, and 24-month averages.”