RBA: Cold water on near-term rate cut hopes - TDS

Analysts at TD Securities point out that in a highly anticipated speech, RBA Deputy Governor Debelle poured cold water on near-term rate cut hopes.

Key Quotes

“While the speech was wide-ranging, a key sentence was "Hopefully we will get some resolution of this tension in the coming months with the incoming flow of data". The 'tension' the Deputy Governor is referring to is the (global) issue of how soggy growth can co-exist with strong labour markets.”

“Growth disappointment is squarely at the foot of the consumers in Australia as investment and exports are thriving. By emphasizing that it make take a while for this 'tension' to be resolved, the RBA is expressing patience. This contrasts with a market that is impatient for a cut - or at the very least an explicit easing bias - at the next Board meeting on May 7. AUD reversed earlier losses and OIS pricing has scaled back an August cut from 100% to 85%. May is now practically off the table.”

“Consumer sentiment rose to 100.7 as expected while conditions went backwards -3.2% to 97.8 while expectations jumped 5.4% to 102.5 via family finances and economy 1 year ahead (105.6 and 101.8 respectively).”