RBA left the cash rate at 1.5% - TDS

As unanimously expected, the RBA left the cash rate at 1.5% and the last adjustment to the cash rate was -25bp in August 2016, so continuing the record-breaking run of no action, points out Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities.

Key Quotes

“Providing stability by doing nothing is the Bank's stance just now, as well as quietly welcoming the 5% (TWI) to 8% (vs USD) YTD AUD depreciation.”

“The RBA repeated last month's "The drought has led to difficult conditions in parts of the farm sector" and without acknowledging that a major bank lifted its mortgage rate last week, the RBA also repeated that despite higher funding costs "the average mortgage rate is lower than a year ago".”

“The markets are not ruling out that at least one other major bank announces a higher standard variable mortgage rate (SVR) soon.”

“Final Q2 GDP inputs were released earlier. Q2 trade as expected adding +0.1%pts, while public sector spending adds +0.2%pts. Overall, we look for Q2 GDP of +0.8%/q or 2.9%/y. The latter has upside as we expect an upgrade to Q1 GDP from +1.0% to +1.2%/q.”

“OIS is dead flat at 1.5% and ~30% priced for +25bp by November 2019.”

“The AUD bounced on the lack of dovish tones, regaining $US0.7224, but we don't see anything in the statement for guidance one way or the other.”

“Consensus expects the cash rate to remain unchanged at 1.5% through to Q3 2019, so these monthly Board meetings 'should' be non-events for quite some time.”