RBA to sit tight until well into 2018 – TDS

The RBA left the cash rate at 1.5%, surprising no-one and the tone was less cautious, using ‘uncertainty’ once, and tied to household consumption, explains the research team at TDS.

Key Quotes

“An addition was “employers are finding it more difficult to hire [skilled] workers”. Wages to rise further in 2018? TD thinks so.”

“Ahead of the RBA, the AUD had surged to $US0.7646 on upbeat retail sales (Oct +0.5%/mth and Sep upgraded to +0.1%/mth). More prints like this and the RBA’s perceived downside risk to activity is eliminated.”

“In contrast, trade and govt spending disappointed, and our final Q3 GDP estimate is +0.5%/qtr or 2.8%/yr, although in line with the RBA’s present thinking. We never know ~25% of GDP (‘other’ consumption) heading into the release, so there is always the risk of a surprise tomorrow, in either direction.”