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RBA’s next move a 25bps hike in Q3 2015 - Standard Chartered

FXStreet (Bali) - According to Standard Chartered, The RBA’s next move will likely be a 25bps hike in Q3-2015

Key Quotes

"The RBA maintained its neutral stance in Q3, supported by better-than-expected domestic data and subdued inflation. Governor Stevens, in a September speech, almost ruled out the possibility of further rate cuts during the current easing cycle, noting that they would risk inflating already-high house prices. This is in line with the view we have held since March 2014, when we forecast that the central bank was at the end of its easing cycle."

"The RBA has also taken comfort from better-than- expected Q2 capex data – particularly the improvement in actual and planned non- mining capex, which indicates that better business sentiment is translating into investment. The central bank has also reiterated that there is “likely to be a period of stability in interest rates”.

"We expect the RBA to keep its policy rate on hold for now. We now foresee a longer period of interest rate stability and push back our expectation of a rate hike to Q3-2015. The RBA will likely start policy normalisation with a 25bps hike in Q3-2015, after the first expected Fed rate hike, as inflation rises."

"We think housing-price inflation is nearing its peak; we maintain our view that the RBA is unlikely to resort to macro- prudential measures, and might have to raise interest rates earlier if housing inflation rises further. Markets expect no more rate moves this year."

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