2 Feb 2015
RBA might keep rates unchanged, change guidance – ANZ
FXStreet (Barcelona) - According to ANZ, the RBA might keep its rates unchanged at 2.50% but might drop ‘period of stability’ and substitute it with something that indicates probability of further rate cuts.
Key Quotes
“We expect the RBA Board to leave the cash rate at 2.50% next week but change the guidance by dropping ‘period of stability’ and inserting either ‘appropriate for the time being’ or ‘scope for easing’.”
“In line with a new easing bias we expect the tone of the statement to shift slightly, focusing on easing mortgage demand and lower inflation as a catalyst to reduce rates a little further.”
“We would expect the bank to remain constructive on the medium-term economic prospects for the US, Chinese and Australian economies.”
“A hawkish outcome would be for the Board to maintain the status quo, not only keeping rates on hold but sticking with the ‘period of stability’ guidance. This looks like the biggest shock to market expectations with the probability of a rate cut next week priced at 65% and a full 25bp cut priced for March”
“The dovish outcome is a cut, an easing bias and a Statement that indicates further rate cuts are likely. The market would likely price in a sub 2% cash rate for some time in 2015.”
Key Quotes
“We expect the RBA Board to leave the cash rate at 2.50% next week but change the guidance by dropping ‘period of stability’ and inserting either ‘appropriate for the time being’ or ‘scope for easing’.”
“In line with a new easing bias we expect the tone of the statement to shift slightly, focusing on easing mortgage demand and lower inflation as a catalyst to reduce rates a little further.”
“We would expect the bank to remain constructive on the medium-term economic prospects for the US, Chinese and Australian economies.”
“A hawkish outcome would be for the Board to maintain the status quo, not only keeping rates on hold but sticking with the ‘period of stability’ guidance. This looks like the biggest shock to market expectations with the probability of a rate cut next week priced at 65% and a full 25bp cut priced for March”
“The dovish outcome is a cut, an easing bias and a Statement that indicates further rate cuts are likely. The market would likely price in a sub 2% cash rate for some time in 2015.”