Capital Economics said, “We suspect that today’s decision by the RBA to leave interest rates on hold at 2.0% is nothing more than a pause in the loosening cycle that could yet result in rates falling to 1.5% by the end of the year.”
ANZ said, “ Our reading of today’s statement is that the RBA is likely to remain on hold for some months now as it monitors the impact of the two rate cuts delivered earlier this year. We continue to believe that the bank retains an easing bias given deputy governor Philip Lowe’s recent comments that we “still have scope to lower rates if we need to” and the bank’s own forecasts which have below-trend growth extending into 2016 and the unemployment rate heading higher.”
CBA said, “We have had a 2% terminal cash rate target for a while now and that remains our base case. However, we recognise that the risk of a near term rate cut has probably increased recently as a result of the weak capex estimates. The lack of forward guidance … suggest to us that the RBA is a reluctant rate cutter from here… To us, that means that any potential further policy easing will be data dependent. Trends in the labour force will bear watching.”
Market reaction to unchanged cash rate
10 June 2015
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