RBA and the RBI both want to keep their powder dry - Rabobank

Michael Every, Head of Financial Markets Research at Rabobank, suggests that the threat of market risks yet to come no doubt played a large role in the inaction we saw from both the RBA and the RBI yesterday at their rate-setting meetings: both arguably want to keep their powder dry for the many battles ahead.

Key Quotes

“However, for the former the absence of anything pointing to an easing bias in its statement once again was a case of shooting itself in the foot: AUD has jumped up to over 74.50 again as a result of that and the Fed’s likely summer holiday. One would think that the RBA might have spotted this damaging pattern over the previous few years but it seems not (and as such the titles of two famous novels by Dostoyevsky immediately spring to mind…and neither of them are The Brothers Karamazov).

Meanwhile, in India we didn’t get any further clues on the future of RBI Governor Rajan after his term ends this September: does that make him a potential Septembrist victim too? At his press conference he adroitly passed the ball back to the government on that key topic.”