RBA to keep rates on hold in coming quarters - HSBC

Today the Reserve Bank of Australia (RBA) left interest rate unchanged at 1.50%. Paul Bloxham, Chief Economist at HSBC Bank Australia Limited, said that they expect the RBA to keep the key interest rate unchanged in coming quarters.

Key Quotes: 

“The RBA kept its cash rate steady at 1.50% today, as expected. Although underlying inflation is running at 1.5% y-o-y, which is below the RBA's 2-3% target band, the central bank noted that 'the September quarter inflation data were broadly as expected' and that 'inflation is expected to pick up gradually over the next two years'. It's clear that although inflation is still below target the RBA is making use of the 'flexible' and 'medium-term' nature of the inflation targeting regime. In short, the RBA decision-makers are not 'inflation nutters'.”

“Today they backed this up with (lack of) action. Overall, the statement was little changed from last month. Somewhat surprisingly, there was no specific reference to the recent sharp rise in coal prices. We expect the RBA to be on   hold at 1.50% in coming quarters.”

“We will be looking out for more on commodity prices and the likely impact on growth and inflation in the RBA's detailed quarterly official statement due out on Friday 4 November.”