Betwixt and between: We still see the RBA cutting the cash rate, but recognise that it is more likely to be a first half 2016 event, than at the one meeting remaining this year

The RBA’s recent decision to leave the cash rate on hold at 2.00% must have been a close call if the brief comments in the accompanying statement about the RBA board’s decision are anything to go by. There are several sections of the statement that seem to argue the case for easing rates further – persistent below long-term average GDP growth; further softening in economic conditions in Asia; Australia’s still falling terms of trade; inflation lower than previously expected; and the need for monetary policy to be accommodative “while recent changes to some lending rates for housing will reduce this support slightly”. The sections that support a no rate change are fewer including a gradual improvement in business conditions based on survey material and strong enough growth in employment to keep the unemployment rate stable (although as the data proves a stable unemployment rate around 6.2% has gone hand-in-hand with inflation falling more than expected). To view the full article, click on the link: (VIEW LINK)