RBA: No fireworks - TDS

The RBA left the cash rate at 1.5%, surprising no-one, and the last adjustment was a 25bp cut in August 2016, points out Annette Beacher, Chief Asia-Pacific Macro Strategist at TDS.

Key Quotes

“The statement covered familiar themes: upbeat when referring to the global backdrop, commodity prices and private/public investment; dovish tones tied to excess capacity in the labour market and high levels of debt constraining household spending.”

“The AUD remains surprisingly well bid (high of $US0.7793) despite iron ore futures sliding through $US70/t early this morning and January retail sales materially disappointed a few hours later (+0.1%/m cf mkt +0.4%/m). Nothing the RBA said today moved the needle for the exchange rate.”

“Earlier today, upside from net exports (-0.5%pts) and government spending (+0.5%pts) offset yesterday's miss on inventories. Our 'final' Dec qtr GDP estimate is +0.6%/qtr and 2.6%/yr, consistent with the RBA’s present thinking of 2½%/y for end-2017. As ~25% of GDP is not covered by partial data (i.e. ‘other’ consumption like rent, health, education and communication) there remains the risk of a sticker shock headline, in either direction. Mkt median is +0.5%, range +0.2 to +0.8%.”