- Prior 3.85%
- Inflation has continued to moderate
- With the cash rate 50 bps lower than five months ago and wider economic conditions evolving broadly as expected, RBA judges that it could wait for a little more information to confirm that inflation remains on track to reach 2.5% on a sustainable basis
- The outlook remains uncertain
- Various indicators suggest that labour market conditions remain tight
- There are uncertainties about the outlook for domestic economic activity
- There are also uncertainties regarding the lags in the effect of recent monetary policy easing
- Maintaining price stability and full employment is the priority
- The risks to inflation have become more balanced and the labour market remains strong
- Will be attentive to the data and the evolving assessment of risks to guide its decisions
- Focused on mandate to deliver price stability, full employment and will do what is necessary to achieve that
- Full statement
The only real surprise is the rate decision itself. For the most part, the policy language remains the same as it was in May. And that includes the key phrasing of “maintaining price stability and full employment is the priority”. Besides that, the rest of the guidance paragraph is also much retained as they also continue to note that the risks to inflation are now “more balanced”.
So, the standout is only the fact that they decided to push back against market pricing and stand their ground in wanting to wait for more information. One can definitely respect that as too often do central banks get bullied by markets into policy decisions these days. *coughs in Fedspeak*
AUD/USD has shot higher, erasing losses from yesterday with moving up from 0.6513 to 0.6540 currently. The immediate high touched 0.6556 as traders need to do some repricing here. Coming into the meeting decision, traders priced in ~92% odds of a rate cut with ~74 bps of rate cuts by year-end.
Feed from Forexlive.com