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27 Aug 2015
RBA to continue monitoring or act? - UOB
FXStreet (Guatemala) - Analysts at UOB Group noted the forthcoming RBA meeting coming up.
Key Quotes:
"The RBA chose to keep interest rates unchanged at a record low of 2.0% during the June meeting. Whilst there is room for further easing amid continuing sluggishness in business investment and consumer spending, we believe the central bank would prefer to monitor the impact of the 50bps cuts already delivered this year."
"Besides, it continues to be in a difficult position. Although low interest rates are required to support the rebalancing of growth towards the non-mining sectors of the economy; the RBA is reluctant to cut rates further, doubting the efficacy of further reductions on anything other than the Sydney, and to a lesser extent, Melbourne property markets. As it is, the Australian Prudential Regulation Authority (APRA) has been turning up the dial on lending standards, especially when growth in lending to housing investors has been running ahead of the 10% target pace."
"Hence, we think the RBA would also want to watch the effects of APRA’s tightening measures first. Meanwhile, it will continue to keep a close eye on incoming economic data and the Australian currency. In all, our own view remains unchanged. We continue to think that the current rate of 2.0% should mark the low point for the cash rate in this easing cycle."
Key Quotes:
"The RBA chose to keep interest rates unchanged at a record low of 2.0% during the June meeting. Whilst there is room for further easing amid continuing sluggishness in business investment and consumer spending, we believe the central bank would prefer to monitor the impact of the 50bps cuts already delivered this year."
"Besides, it continues to be in a difficult position. Although low interest rates are required to support the rebalancing of growth towards the non-mining sectors of the economy; the RBA is reluctant to cut rates further, doubting the efficacy of further reductions on anything other than the Sydney, and to a lesser extent, Melbourne property markets. As it is, the Australian Prudential Regulation Authority (APRA) has been turning up the dial on lending standards, especially when growth in lending to housing investors has been running ahead of the 10% target pace."
"Hence, we think the RBA would also want to watch the effects of APRA’s tightening measures first. Meanwhile, it will continue to keep a close eye on incoming economic data and the Australian currency. In all, our own view remains unchanged. We continue to think that the current rate of 2.0% should mark the low point for the cash rate in this easing cycle."