I did a preview here: Preview of the Reserve Bank of Australia monetary policy meeting
Adam’s is here: What you need to know ahead of the RBA decision
In brief, expect
- No cut
- Shift to dovish guidance
But … what else to expect?
The announcement will be immediately accompanied by a statement. The statement normally follows a similar format each month, with comments on:
- The state of the global economy
- Commodity prices
- Financial market conditions and developments
- Domestic growth and inflation
- And the usually on the the exchange rate
Looking at each of these in turn …
Global economy:
- The statement will likely note downward revisions to world growth estimates
- the IMF, for example, recently downgraded China ( to 6.8% for 2015, from 7.1% and for 2016 to 6.3% from 6.8%) ) and global growth forecasts
Will also likely note recent falls in some commodity prices – and the negative impact on Australian exports
Will likely note increased financial market volatility
On domestic growth:
- Likely to continue to describe the current pace of growth as “moderate”, though the risk is they lower their estimates. Liekly to note a positive impact from the fall in oil prices.
On inflation – likely to be described as in line with forecasts and within the target band, though there is an (outside) chance they may express concern on the recent uptick in core inflation
Exchange rate comments … while the AUD/USD is off since the last meeting, as is the trade weighted index, the board will want it to fall further, though they may well refrain to much of a comment as it is moving in the desired direction
The “prudent course is period of stability in rates” is likely to disappear in favour of a more dovish lean