RBA Governor Lowe speaks today - he'll stay on track with SoMP comments - preview

Author: Eamonn Sheridan | Category: Central Banks

Reserve Bank of Australia Gov. Philip Lowe appears before the Australian parliament's House of Representatives' Standing Committee on Economics today

  • Due from 2330GMT
What's he gonna say? He won't depart too much from RBA analysis contained in the bank's  (just out last week) Statement on Monetary Policy (SoMP)

That is pretty much the message banks are giving to their clients too:

NAB: Friday's House Economics testimony from RBA Governor Lowe will be a focus for the week, offering as it does the opportunity for Committee MPs to quiz the Governor and his team on the economy and monetary policy. The Governor's Opening Statement will no doubt be a potted summary of last week's Board deliberations and RBA refreshed forecasts outlined in Friday's Statement on Monetary Policy (SoMP). It will be the extensive Q&A where the market will be looking for any information nuggets on the Bank's latest read on the economy and outlook, including risks, not to mention what if anything the RBA can do about an over-valuation in the AUD.

ANZ: RBA's rhetoric this week ... Lowe and Kent may keep jawboning the currency and warning on the risks to the economy of extending the AUD surge, the implications for monetary policy of a stronger dollar are neutral (if a stronger AUD may be delaying rate hikes, it won't certainly lead to rate cuts). Considering that market's pricing for the RBA is already very flat, any impact on the AUD from RBA's rhetoric will be short-lived.

CBA: Governor Lowe will repeat the script outlined in last Friday's RBA SMP and recent Board minutes sounding more upbeat on the domestic economy. And warning about the negative growth outlook impact of a sustained stronger AUD.

TD Securities: RBA Governor Lowe's first testimony was memorable for claiming that "we aren't inflation nutters". Let's see what gems arise out of this testimony. Expect questions about the exchange rate, rising inequality and house prices/affordability from assorted politicians.

RBC: In true Governor Lowe style, this testimony is likely to be reasonably upbeat, with the RBA confirming its expectation of a likely return to above-trend growth, firmer labour market, and an eventual return to within target inflation. Discussion on the global outlook is set to remain positive. Some caution will, however, be injected via some uncertainty over household consumption, the outlook for nonmining capex, and the potential risk to both activity and inflation from a stronger currency. Comments on the latter will bear watching, with recent communication signalling a little more discomfort with appreciation. All up, we expect the testimony to be consistent with a neutral bias and continued steady cash.