The RBA left the cash rate at 2.00% at its April 2016 board meeting earlier today. This makes it the tenth meeting in a row where the official cash rate has not changed. Economists were not expecting any change and cash markets had implied a 6% chance of an April cut. However, cash markets have factored in much greater chances of rate reductions in May or June and while banks such as Westpac think the RBA will not cut rates this year or next, they are not totally discounting the possibility. “We have consistently argued that any move from here, at these low rate levels, is only likely to occur at the February, May, August, and November meetings.” RBA meetings in these months precede the quarterly Statement on Monetary Policy which Westpac thinks will be needed to justify any change. AMP Capital’s Shane Oliver said the RBA retained its “easing bias” and he still anticipated another rate cut while conceding it was a not a done deal.
ANZ‘s Justin Fabo singled out the RBA’s attempt to “jawbone” the currency down but the attempt, if it was one, failed as the Aussie gained half a cent against the greenback. About the only other thing which looks vaguely controversial is the implied dig at the world’s central banks. The RBA statement noted how “globally, monetary policy remains remarkably accommodative” and this was taken as a dig at several central banks’ policies of zero or near-zero interest rates.
A full text of the statement is available at http://www.rba.gov.au/media-releases/2016/mr-16-08.html