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RBA preview: policy unchanged again - Nomura

FXStreet (Bali) - Policy stance by the RBA is neutral with no intention to cut, notes Charles St-Arnaud, Economist at Nomura.

Key Quotes

"The Reserve Bank of Australia (RBA) will hold its next monetary policy meeting on 2 September. At its board meeting in August, the RBA left its policy rate unchanged at 2.50% and stated that "monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates”. "

"The RBA also kept intact the wording on the concern about the level of the exchange rate, reiterating that “the exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy.” With the AUD is roughly unchanged since the August meeting, we think it likely that the RBA will reiterate its discomfort about the level of the currency."

"Indicators received since the August meeting have been mixed. Moreover, a recent communication by Governor Stevens suggests that there is not any interest in changing monetary policy. As a result, we believe that the RBA's policy stance remains firmly neutral and expect the central bank to leave monetary policy unchanged at next week‟s meeting. Moreover, we think the statement will continue to suggest that the RBA is not considering any changes to its policy stance and will very likely reiterate that “the most prudent course is likely to be a period of stability in interest rates”. We continue to believe that the RBA will keep monetary policy unchanged this year and that the first hike will occur in H1 2015, likely in Q2."

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