The RBA will release its decision at 2.30pm after this morning’s board meeting. While no-one really expects any movement in rates, the governor signaled recently the time to change language might be soon and the Capex data last week might give him an excuse.
We’ll be covering the data live here at Business Insider but in the lead-up, here are two previews.
National Australia Bank Market Economics team
The RBA is sure to leave the cash rate at 2.5% and almost certain to repeat that “On present indications, the most prudent course is likely to be a period of stability in interest rates.”
Of course, this prudent course remains a balancing act between an $A that is too high for their liking and interest rates that are too low. They’d prefer a different mix for sure.
NAB still sees the RBA staying on hold as they wait for the mix of forces on the economy to resolve – this could take some time. We have also been warning that if the RBA need to do anything in the next year it is more likely to be a cut. On balance, recent developments have reduced the risk they may need to cut again and language tweaks in Tuesday’s Statement should reflect this.
The ANZ believes the RBA will be impressed by the Capex data last week
In our view, the RBA is also likely to be encouraged by the further improvement in non-mining investment intentions but is likely to want to see more concrete evidence of an entrenched non-mining recovery before it begins to think about lifting the cash rate.
The RBA’s post board meeting statement is likely to note the upgrade to non-mining firms’ investment intentions from this week’s CAPEX report. Apart from this, we expect the post meeting statement, as well as RBA governor Stevens’ speech on Wednesday to provide few surprises, given that we have heard from the RBA a number of times in recent weeks.