The Reserve Bank of Australia left the cash rate unchanged yesterday, as widely expected:
- RBA leaves cash rate unchanged at 4.35%, as expected
- RBA's Bullock: We did not consider the case for a rate cut today
- RBA's Bullock: We need a lot to go our way to bring inflation back to range
Via Westpac, a recap, in brief from a much longer report:
The RBA is more alert and less confident in its inflation fight.
- the RBA Board left the cash rate on hold after only considering a rate hike or staying the course. That is, a rate cut was not discussed. What’s more, the tone of the statement and rhetoric from the RBA Governor Michele Bullock suggested a step up in concerns around upside inflation risks, despite repeating the now familiar mantra of not ruling anything in or out.
- In perhaps one of the more telling remarks of the press conference, Governor Bullock said “we need a lot to go our way if we are going to bring inflation down to the 2-3% target” and the economy’s narrow path is “getting a bit narrower.”
Tough talk from the RBA and Governor Bullock is not misplaced. Its better to sound hawkish, this in itself can count some way towards a tighter policy. On the other hand, sounding dovish can have an easing impact, at the margin.
AUD/USD update, helped by a softer US dollar.
