- Previous vote: 10/1/2013
hold at to 2.50% (statement)
- Latest vote: 11/5/2013
hold at 2.50% (statement)
Quarterly RBA Statement on Monetary Policy (pdf)
- Next meeting: 12/3/2013
- Australia Q3 GDP: +2.3% y/y (vs. expected +2.6%, prior was +2.6% )
- Australia – AIG Services PMI for November: 48.9 (prior was 47.9)
- Reserve Bank of Australia (RBA) meeting Tuesday – no change expected
- AUD/USD – Aussie Gains After RBA Minutes
- RBA minutes: RBA saw it prudent to hold rates, but not close off chance of cut
- Minutes of the Reserve Bank of Australia November 2013 monetary policy meeting due at 0030GMT
- AUD/USD – NFP Uncertainty Trumps Bearish RBA Statement
- RBA Statement on Monetary Policy: RBA cuts 2014 growth forecast on lower mining investment
- AUD/USD – Bearish Floodgates Waiting To Open After Dismal Job Numbers
- Australian dollar drops on weak employment report
- AUD/USD – Gets Some Relief from Support at 0.9150
- AUD/USD – Returns to Key Level at 0.93
- AUD/USD – Aussie Loses Ground As US Retail Sales Beats Estimate
- 7.2+ Reward/Risk Opportunity on AUDUSD
- AUDUSD corrective rebound, but risk remains lower whilst below .9540
- AUD/USD – Aussie Gains After RBA Minutes
- AUDUSD – Technical Outlook
- Technical Outlook – GBPUSD, EURUSD, AUDUSD
- Daily Forex Update: AUD/CHF
- AUD/USD Technicals – Stoch Divergence Hints Bearish Move
Nov. 7 – In the Quarterly statement on monetary policy (pdf) the RBA cut its 2014 growth forecast based on lower mining investment. The bank has not taken rate cut from the table.
Nov 5 - The RBA held the official cash rate at 2.5%. Did note that AUD is still elevated and is holding back the recovery. It appears to be set to hold for a while now, so rate cut expectations have been pretty much shelved. If we see better data for a couple of months, don’t be surprised if the bank turns hawkish early next year and start discussing rate hike.
Oct. 1 – The RBA held its official cash rate at its record low of 2.50% citing that more time is needed for the previous cut to filter through the economy. As always Glenn Stevens notes that a lower AUD exchange rate would help exports. Nothing new here. Bank seems to be in neutral stance, not dovish, not hawkish, but maybe turning away from the rate cut campaign, which is relatively less dovish. Good economic data like the retail sales that came out around the same time, held the AUD, and bad data should do the opposite.
Sept. 7 (meeting minutes) -
Excerpt from the minutes:
The decision to reduce the cash rate at the August meeting, where the Board had judged that the outlook for inflation provided the scope to ease monetary policy further, brought the total reduction in the cash rate since late 2011 to 225 basis points. Lending rates had declined to historically low levels as a result, which, together with the lower – though still high – exchange rate, were continuing to provide a substantial degree of policy stimulus to the economy. This was most evident in the housing market, with the lags in the effect of policy meaning that earlier actions were still likely to take some time to have their full effect on demand more generally. These conditions would, over time, help the economy negotiate the prospective downshift in resources investment via a switch to other sources of demand. Some further decline in the exchange rate would be helpful in achieving such an outcome.
Given the substantial degree of policy stimulus in place, the Board judged that it was appropriate to retain the current setting of interest rates. Members agreed that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them. The Board would continue to examine the data over the months ahead to assess whether monetary policy was appropriately configured.
Sept. 2 – The RBA held the official cash rate at 2.50%. Glenn Stevens noted that:
- the bank will adjust policy as needed (as always).
- lower levels of mining investment will affect economy
- unemployment ticked higher
- inflation in target for 1-2 yrs- AUD still high, might slide further.
No mention of easing as an option to consider. The AUD rallied after this RBA meeting, but overall trend has been bearish and that has not changed.
August 6 – The RBA cut its official cash rate from 2.75% to 2.50%. This was the dovish action the market has been pricing since April, when the OCR was 3.0%.
Some takeaways from the RBA meeting are listed here:
July 15 – The RBA meeting minutes reflect the RBA’s assessment of economic growth being below trend. Effects of lower interest rate has yet further to run, but can be seen in the housing market. Here is an excerpt from the minutes regarding monetary policy:
Overall economic activity in Australia’s major trading partners appeared to have been growing at close to its long-run average over recent months, and while commodity prices continued to decline, they were little changed in Australian dollar terms over the past two months because of the exchange rate depreciation.
Recent data suggested that domestic economic activity continued to grow at a below trend pace. The outlook for both mining and non-mining business investment remained uncertain. Mining investment was likely to remain high for some quarters given the considerable volume of firmly committed work, even though it looked to be close to, if not past, its peak. At some time beyond that, however, mining investment was expected to decline more rapidly, partly reflecting a significant decline in the planning and development work that is a precondition for new projects. Resources exports were expanding at a strong rate and this was expected to continue as projects currently under construction began production. The outlook for investment in the non-mining business sector remained for moderate growth, but near-term indicators for investment were still somewhat subdued.
The effects of lower interest rates were apparent across a range of indicators and, given the lags involved in the transmission of monetary policy, this process had further to run. The effects to date were most evident in the housing market and were expected to be apparent in further growth in dwelling investment.
The news in recent months had generally been consistent with the outlook for growth being a little below trend and inflation remaining consistent with the medium-term target. The most significant change had been the depreciation of the exchange rate, though members noted that it remained at a high level. The depreciation was expected to add a little to inflation over time, but the forecast was for inflation to remain consistent with the target. Members noted that it was possible that the exchange rate would depreciate further over time as the terms of trade and mining investment declined, which would help to foster a rebalancing of growth in the economy.
Given the exchange rate adjustment that was occurring, and with the substantial degree of monetary stimulus already in place, members assessed the current stance of policy to be appropriate for the time being. The Board also judged that the inflation outlook, although slightly higher because of the exchange rate depreciation, could still provide some scope for further easing, should that be required to support demand.
Learn about the Reserve Bank of Australia
Mandate: 3 main points:
1) Price stability – maintain inflation target of 2-3% annually.
2) Maintenance of full employment
3) Economic prosperity and welfare of Aussies.
Key Members: Governor, deputy governor, secretary to the treasurer and 6 government-appointed members.
Governor: Glenn Stevens
Deputy Governor: Philip Lowe