RBA: Cash rate on hold, slightly less dovish – Goldman Sachs

Analysts at Goldman Sachs published their afterthoughts on the RBA latest policy decision announced earlier on the day.

Key Quotes:

“As expected, the RBA left the cash rate at 1.50% at the first Board meeting of Governor Lowe’s tenure.

“There were no major changes in the accompanying statement, but nor did it provide any sense that the RBA is positioning for another rate cut this year.”

“Indeed, to the contrary, we interpreted a number of small changes as incrementally less dovish.”

“In particular, the commentary around domestic momentum appeared more confident, the caveats on higher commodity prices watered-down, earlier concerns about growth in EM economies omitted, and the language on local housing conditions slightly less relaxed (and certainly compared to when the RBA last cut rates in August).“

“We find it hard to see the RBA cutting rates into the accelerating income environment we are forecasting and particularly if our more constructive views on the global industrial cycle are realised. We expect the RBA to remain on hold through 2016 and 2017.”