RBA maintains status quo amidst mixed economic releases - TDS

The research team at TDS explains that the RBA left its cash rate unchanged at 1.50% as universally expected while the Australian economic releases painted mixed picture.

Key Quotes

“There was little changed in the statement from last month although the RBA’s statement suggests the Bank views the upcoming Q1 GDP as a “quarter to quarter” variation. Also, the dip is not seen as pushing CPI lower. Overall, it is a neutral statement with RBA keeping the faith. Our commentary note will be sent out later.”

“Q1 Current account was little changed from prior at A$-3.1b although the market was expecting an improvement to –A$0.5b. More importantly, net exports contribution to Q1 GDP at –0.7% pts (mkt 0.4%) was softer than consensus.”

“The public sector contribution to GDP was weaker as well. Quarterly Government finance stats revealed public consumption increased by +1% but public investment declined –2.7%. This alters our previously pencilled in +0.3% pt GDP contribution to a flat contribution from public demand. This essentially offsets the gains from inventories yesterday given it was to add a +0.3% contribution.”

“So in the mix, we forecast a +0.2% print for Q1 GDP tomorrow. Median forecast is +0.3%/q for a +1.6% median annual print. The market range is –0.5% to 0.7% for the quarterly print.”

“Finally data from the Balance of Payments report revealed foreign ownership of Australian government bonds rose to 55.6% in Q1 from 55.0% the previous quarter. This marks a pause in the decline of foreign holdings of ACGBs occurring the past few years.”