5 May 2014
RBA to remain on hold and stick to neutral rate outlook - Commerzbank
FXStreet (Córdoba) - Elisabeth Andreae, analyst at Commerzbank commented that the RBA is likely to stick to its key interest rate of 2.5% Tuesday, as data have come in mixed since the last meeting.
Key Quotes
"Whilst surprisingly positive labour market data initially supported the notion of structural change being achieved, this resulted in interest rate hike expectations, with the AUD appreciating further until mid-April".
"This is not in the RBA's interest as – in view of markedly lower commodity prices – the central bank considers the AUD to be overvalued and fears that this will hamper the recovery in major sectors of the economy".
"The RBA's dilemma has diminished thanks to the latest inflation data which came in lower than expected. This, in turn, has dampened interest rate hopes and thus the pressure on the currency. We therefore expect the RBA to remain in hold and also stick to its neutral interest rate outlook".
Key Quotes
"Whilst surprisingly positive labour market data initially supported the notion of structural change being achieved, this resulted in interest rate hike expectations, with the AUD appreciating further until mid-April".
"This is not in the RBA's interest as – in view of markedly lower commodity prices – the central bank considers the AUD to be overvalued and fears that this will hamper the recovery in major sectors of the economy".
"The RBA's dilemma has diminished thanks to the latest inflation data which came in lower than expected. This, in turn, has dampened interest rate hopes and thus the pressure on the currency. We therefore expect the RBA to remain in hold and also stick to its neutral interest rate outlook".