RBA: holds at 1.50%, a level maintained since August 2016, but for how much longer? - Nomura

Analysts at Nomura explained, that as was broadly expected, the RBA left its cash rate at 1.50%, a level it has maintained since August 2016.

Key Quotes:

"Ahead of the meeting there were some expectations that the RBA could take a similarly hawkish turn as those made by some of the other global central banks recently. However, the post-meeting statement continued to provide no clear policy bias and the underlying tone, particularly on inflation and subdued wages, shows little urgency to shift, in our view."

"The RBA repeated that “holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time”. The RBA continues to balance its inflation and employment objectives with financial stability risks."

"We continue to argue that cash rate risks remain tilted to the downside over the next 12 months (see Asia in Charts - Australia: Macro and market outlook, 26 June 2017). In our base case, we have pencilled in another rate cut for Q1 2018."

"Looking ahead, we expect the RBA to lag the more hawkish developments of other central banks given the degree of slack that remains in both the Australian economy and labour market."