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RBA: Risks remain to the downside - Westpac

FXStreet (Bali) - According to Westpac's Bill, risks on RBA rates remain to the downside on global outlook; the terms of trade; and the labour market.


Key Quotes

"As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 2%."

"Arguably the Governor’s statement in October represents the fewest number of changes to the previous month’s statement that we have ever seen." 

"Of course this is particularly important given that the next meeting will be in November, whichis one of the four meetings per year where the Bank reviews its forecasts for both growth and inflation and therefore represents the most likely timing for a policy adjustment."

"In providing minimal wording changes the signal seems quite clear that it is unlikely that the Bank will see the need to substantially revise its growth forecasts and therefore need to further ease rates."

"As expected the wording around the Australian dollar was unchanged,” The Australian dollar is adjusting to the significant declines in commodity prices.” There was also noreason to change the commentary around the Australian dollar which prior to the September meeting was around US 71.20 and today is around US 70.80, with iron ore prices generally stable."

"Markets have shaved the probability of a move this year to around 40% but still have a 100% probability of a move by February/March next year."

"It is our view that the Bank will not need to sufficiently change its growth forecasts for 2015 and 2016 that would necessitate further policy support. That would mean rates onhold in both 2015 and 2016. However, risks on rates remain to the downside particularly around the global outlook; the terms of trade; and the labour market."

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