RBA chief Philip Lowe gave a speech with the title “The Year Ahead” to the National Press Club of Australia in Sydney on Wednesday. Most of it was similar to a cut-down version of the minutes of any RBA Board meeting. However, there were two sentences which had quite an effect on yields in local bond and cash markets.
“Looking forward, there are scenarios where the next move in the cash rate is up and other scenarios where it is down.” This sentence itself was unremarkable; of course, there are small and unlikely possibilities. However, for some time the RBA had held a bias towards higher official rates.
Close to the end of January, RBA Board member Ian Harper had said he personally viewed the next move of the cash rate as likely to be an increase. The minutes of recent Board meetings had been a little less assertive but there was not a great deal of difference. According to the minutes of the December meeting, “…the next move in the cash rate was more likely to be an increase than a decrease, but that there was no strong case for a near-term adjustment in monetary policy.”