Australia: We do not expect a rate cut - BBH

According to analysts from Brown Brother Harriman, the Reserve Bank of Australia (RBA), that meets in a few hours, during Tuesday’s Asian session, will keep rates unchanged.

Key Quotes: 

“Some economists expect a rate cut, but we do not.  Former Governor Stevens and his successor Lowe indicated that the RBA would not respond mechanically to the undershoot of inflation.”

“They have indicated that provided growth and the labor market do not deteriorate, the RBA is not in anxious about cutting rates further from the record low levels.  The housing-related data remain firm. 

“The Australian dollar remains resilient even though $0.7700 ceiling is proving formidable.  Australia’s relatively high-interest rates and AAA rating are important attractors.  The rally in industrial metals and better terms of trade are frosting on the fundamental cake.”