6 Apr 2015
RBA to lower the cash rate target by 25bp - RBS
FXStreet (Bali) - Brian Daingerfield, FX Trading Strategist at RBS, expects the RBA to lower the cash rate target by 25bp at today's meeting.
Key Quotes
After holding its policy rate steady at 2.25% in March, we expect the RBA to lower the cash rate target by 25bp at their April meeting.
The RBA noted in March that “further easing of monetary policy may be appropriate over the period ahead” which is, in our view, surprisingly blunt guidance that additional rate cuts may be needed.
Downside risks to both commodity prices and growth in China paired with a still-below-trend domestic growth pace are likely enough to merit such further easing at the April meeting.
We also anticipate the RBA to keep a similar tone on the FX rate, continuing to note that “a lower exchange rate is likely to be needed to achieve balanced growth in the economy.” We see a push through parity in AUD/NZD as likely and ultimately expect AUD/USD to come under further significant pressure this year.
Key Quotes
After holding its policy rate steady at 2.25% in March, we expect the RBA to lower the cash rate target by 25bp at their April meeting.
The RBA noted in March that “further easing of monetary policy may be appropriate over the period ahead” which is, in our view, surprisingly blunt guidance that additional rate cuts may be needed.
Downside risks to both commodity prices and growth in China paired with a still-below-trend domestic growth pace are likely enough to merit such further easing at the April meeting.
We also anticipate the RBA to keep a similar tone on the FX rate, continuing to note that “a lower exchange rate is likely to be needed to achieve balanced growth in the economy.” We see a push through parity in AUD/NZD as likely and ultimately expect AUD/USD to come under further significant pressure this year.