RBA almost certain to keep rates on hold in September - Westpac

Bill Evans, Chief Economist at Westpac, suggests that the Australia’s Reserve Bank Board next meets on September 6 and after having cut rates at its last meeting the Board is almost certain to keep rates on hold in September.

Key Quotes

“However it is clear from the Bank’s recent Statement on Monetary Policy that it holds an easing bias. That sentiment has encouraged markets to expect a further cut in November following the release of the next inflation report. The case for a cut is based on Australia’s ongoing low inflation environment.

However, by November, consistent with some of the messages in this survey we expect that economic conditions will have firmed sufficiently for the Bank to be more patient with its inflation objective. It may recognise that rigid adherence to the current inflation target of 2–3% might not be the best way to run policy in this current low inflation world.

Accordingly we expect that the Bank will decide to hold rates steady in November”