Comments on the RBA from Westpac Chief Economist Bill Evans today:

(bolding mine, no change from WPAC)

  • The Reserve Bank Board next meets on September 5. There is no doubt that the Board will continue to leave the cash rate on hold.
  • The more interesting question is whether, as expected by markets and signalled by consumers' responses in the Westpac-Melbourne Institute Consumer Sentiment survey, the RBA will raise rates next year.
  • High business confidence and improving employment conditions along with the Bank's own upbeat growth forecasts support the case for higher rates. On the other hand we continue to see evidence of a downbeat consumer and signs that the housing markets are set to slow under the weight of stretched affordability.
  • It is interesting that in the Bank's Board minutes which were released on August 15 it sounded less confident about achieving its inflation target. We concur and, consistent with below trend growth, expect that rates will remain on hold through 2018.