What To Expect From RBA? – Views From 10 Banks

Tuesday, 02/09/2014 | 02:28 GMT-0

Here’s more, this time from the guys at eFX:

GS:

We expect rates on hold (cash rate 2.50%, in line with consensus). Markets will be focused on how the RBA has interpreted key developments since the lengthy parliamentary testimony on 20 August. In particular, we will be looking for any weakening in the RBA’s resolve given further material falls in the iron ore price, resilience in the AUD, and the weak read-through of recent partial data for 2Q2014 GDP.

BofA:

With the unanimous expectation that rates will be on hold, focus will again be on any changes in the tone of the communication. We think there is at least some marginal potential for additional cautious language in this week’s communication that will accompany the Board meeting decision. This is particularly true for short-term growth and the labour market. However, none of this should be particularly new and it should have been largely priced in by the market. This is because it has been foreshadowed by either the Governor himself or in the Statement on Monetary Policy (SoMP). The RBA’s communications recently have highlighted the uncertainties in the outlook with adjustment in resources sector investment. And until at least some measure of certainty returns, we expect the RBA to do nothing. This leads us to maintain our view that policy will remain unchanged until 2016, and when the tightening cycle begins it will be very tentative.

Barclays:

Neither we nor markets expect a change in policy from the Reserve Bank of Australia when it meets on Tuesday. The accompanying statement will be the key focus, but coming shortly after Governor Stevens’ recent testimony, there is likely to be little to move markets.

Credit Suisse:

We do not expect any changes in policy from the RBA, in line with consensus. Q2 GDP is expected to rise 0.4% qoq, down from the 1.1% pace in Q1. We are slightly bearish on AUDUSD at current levels.

BNPP:

BNP Paribas’ view IS for the RBA to maintain on hold for the next 12 months at the very least. We remain short AUDCAD as the AUD appears vulnerable at current levels. Next week’s BoC policy meeting is unlikely to provide a support for the CAD, but Canadian employment growth is likely to have remained firm in August.

Citi:

We believe risks stemming from tomorrow’s RBA policy meeting are weighted to the upside for AUD. Given the backdrop of broad USD strength, any AUD appreciation is likely to be concentrated on the crosses as opposed to AUDUSD. As such we favor long AUD positions vis a vis currencies such as EUR and NZD ahead of the release.

ANZ:

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.

Nomura:

The Reserve Bank of Australia (RBA) will hold its next monetary policy meeting on 2 September. Indicators received since the August meeting have been mixed. Moreover, a recent communication by Governor Stevens saying that ‘he does not think lower rates are the answer at the moment’ suggests that there is not any interest in changing monetary policy. As a result, we believe that the RBA’s policy stance remains firmly neutral and expect the central bank to leave monetary policy unchanged at this week’s meeting. Moreover, we think the statement will continue to suggest that the RBA is not considering any changes to its policy stance and will very likely reiterate that “the most prudent course is likely to be a period of stability in interest rates”. With the AUD is roughly unchanged since the August meeting, we think it likely that the RBA will reiterate its discomfort about the level of the currency, likely reiterating that “the exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy.” We continue to believe that the RBA will keep monetary policy unchanged this year and that the first hike will occur in H1 2015, likely in Q.

Credit Agricole:

The RBA will be holding its policy meeting today. It will in all likelihood be another status quo decision and the central bank will also likely maintain the stance of rate stability, as Governor Stevens did during his testimony to the Parliament earlier this month. Investment data last week showed more improvement and the central bank could acknowledge progress on this front but the overall tone will likely be similar.

Westpac:

There is once again no tension over the RBA’s decision on the cash rate and only moderate interest in the tone of the statement at 2:30pm Syd/12:30pm Sing/HK. Commentary on the economy should be wary ahead of the GDP data and indeed with officials already talking about Q3 instead, taking a soft Q2 as given.

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