RBA: Premature to tighten despite of pickup in economic cycle - Natixis

Kohei Iwahara, Research Analyst at Natixis suggests that the RBA is expected to leave the cash rate unchanged at 1.50% at the September meeting.

Key Quotes

“Although the economy is gathering momentum, it is still premature to tighten soon. The strong Aussie could delay the economic transition away from the mining sector, by reducing tourism.”

“Furthermore, the increase in mining investments has not offset the drop in mining investments yet.”

“Australia also needs a stronger labor market so that higher wages can help lift inflation, which undershot the RBA’s target during the second quarter of 2017.”

“At the same time, the pick-up in housing prices is been tackled with macroprudential tools, allowing the RBA to remain accommodative.”