RBA cash rate: market pricing - Westpac

FXStreet (Delhi) – Sean Callow, Research Analyst at Westpac, expects RBA to keep rates on hold at 2% through 2016.

Key Quotes

“The RBA held the cash rate at 2.0% in November for the fifth straight month. The downside surprise on Q3 CPI did not produce the rate cut a minority had expected but the RBA did say that “the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.”

“The RBA’s Nov Statement on Monetary Policy included a forecast of 3% y/y growth by Dec 2016. So long as this is the RBA’s view, they should be content with a 2% cash rate. The main risk to the outlook seems to be from the terms of trade.”
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