RBA strengthens its forward guidance – ANZ

Felicity Emmett, senior economist at ANZ, points out that as per expectations, the RBA cut the cash rate to 0.75% following its meeting today.

Key Quotes

“Consistent with the cut, the commentary in the post-meeting statement was more dovish and leaves open the way for further rate cuts. We think the RBA will ease again, with the evolution of the data and global central bank decisions important in determining the timing of the next cut.”

“Importantly, there were significant changes to the final paragraph that we interpret as quite dovish.”

“The Bank now looks to be saying that it is not enough to be making progress towards its goals of full employment and inflation inside the target: rates will need to stay low until they actually achieve that. This seems to be firming of the Bank’s earlier forward guidance first introduced in late July.”

“Does that signal another near term cut? Possibly. At the moment we expect two more cuts next year, pencilled in for February and May. Weaker than expected domestic data, and/or more-than-expected global central bank easing could prompt us to bring those cuts forward.”