Comments from NAB in the wake of yesterday's CPI and Governor Stevens speech

This is from 2 separate client notes from NAB

In response to Stevens:

  • RBA on hold for now
  • Asked about the prospect for further rate cuts ... said it while it remains on the table a balance has to be found ... RBA ... seeking a stance that will most effectively foster sustainable growth, emphasising the differences between risk - taking behaviour to generate economic growth and the dangers of excessive financial risk taking
  • A refusal to be drawn on whether the AUD has fallen enough. Asked about the RBA ' s line that a further fall is both ' necessary and likely; ... said the AUD is adjusting as you would expect

On CPI:

  • moderate inflation - in the lower half of the 2 - 3% target band in underlying terms - buys the RBA more time to leave the already accommodative stance of monetary policy unchanged
  • NAB continues to expect that monetary policy will remain on hold this year and into next, especially with tentative evidence of improvement in high frequency indicators and a steady unemployment rate of late
  • NAB's economic forecast is consistent with a rise in the cash rate late in 2016