RBA: No fireworks offered – Nomura

The Reserve Bank of Australia (RBA) again left its cash rate at 1.50% at today’s meeting, as was uniformly expected, points out the research team at Nomura.

Key Quotes

“Its press release suggests that its central case – for stronger growth in 2018 and further gradual progress towards its unemployment and inflation objectives – remains intact and, indeed, a full five of its 10-paragraphs in today’s press release were repeated verbatim. However, we note that new additions did have a net softer tilt, including its acknowledgement of US trade policy uncertainty, recent tightening in short-term funding markets and recent price declines of some key commodities.”

“Our base case remains for a first rate hike in November 2018. Although the RBA appears to be a bit more wary today, at the moment it is simply observing some new developments rather than expressing material concerns. In terms of market strategy, we continue to think that the very front of the OIS strip has rallied too far. We also remain cautious on AUD, noting lower bulk commodity prices and a speculative community that is still somewhat long AUD; we expect AUD to ease further, to around AUD/USD 73-75 cents over Q2/Q3.”