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RBA’s policy stance to remain firmly neutral - Nomura

FXStreet (Bali) - Nomura expects the RBA’s policy stance to remain firmly neutral today, adding that the accompanying statement will continue to suggest that the RBA is not considering any changes to its policy stance.

Key Quotes

"The Reserve Bank of Australia (RBA) will hold its next monetary policy meeting on 2 September. Indicators received since the August meeting have been mixed. Moreover, a recent communication by Governor Stevens saying that ‘he does not think lower rates are the answer at the moment’ 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 this 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”. 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, likely 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.”

"We continue to believe that the RBA will keep monetary policy unchanged this year and that the first hike will occur in H1 2015."

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