AUD slumped, but what it a mistake?
Citi discusses the RBA policy trajectory in light of this week's RBA Minutes.
"RBA November Minutes released yesterday are initially interpreted as unexpectedly dovish with policymakers agreeing a case could be made to cut rates at in November. This is new to the policy language but AUD losses are short-lived as the phrasing rather suggests the RBA wants to ensure markets understand they retain a dovish bias, rather than signaling a December rate cut," Citi notes.
"Bottom Line - Citi analysts expect another RBA rate cut, just not in December....by February, the RBA will likely have more retail trade and labor force data at its disposal and the Board may be more inclined to provide extra stimulus to give it a better chance of achieving its inflation target. The RBA may also introduce some type of funding program that maximizes policy transmission through the banking system announced with the next policy cut," Citi adds.
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