AUD: RBA’S Stevens highlights flexibility - ANZ

Research Team at ANZ, notes that the RBA Governor Glenn Stevens spoke today on inflation, emphasising the importance of the 2-3% inflation target, but that the Bank takes a flexible approach to the target and that monetary policy still works.

Key Quotes

“Overall, we think that today’s comments suggest that the Bank will continue to respond to inflation, but will not slavishly cut rates in response to further disappointment on the inflation front. With growth looking okay, we continue to look for another 25bp cut at the August meeting with the Bank on hold following that.

There are no major market implications from today’s communication. We continue to think that rates can rally and that the AUD has further to depreciate.”