24 Jul 2014
RBA on hold until mid-2015 - Nomura
FXStreet (Bali) - Despite Australia's core inflation came stronger-than-expected, Nomura still believes that the RBA is on hold until mid-2015.
Key Quotes
Overall, while headline inflation was in line with expectations, the trimmed mean measure came in stronger. However, the details suggest that some of the upside pressures on inflation in Q2 were a result of one-off factors (tax increases and higher insurance premiums) and higher energy costs, rather than broad-based inflationary pressures due to capacity pressures."
"Moreover, the RBA could take comfort in the gradual moderation in non-tradables inflation over recent quarters. The upside pressure on inflation from house prices continues to be felt, and we believe this hinders any willingness for further rate cuts."
"Moreover, part of the increase in inflation is due to the impact from the lower AUD compared with the same period last year which has pushed tradables inflation higher. However, these pressures should abate in Q3."
"We continue to believe that the RBA is on hold until mid-2015. AUD appreciated to 0.943 from 0.939 on the release, as some investors reversed their expectations that the RBA could cut rates at some point this year."
Key Quotes
Overall, while headline inflation was in line with expectations, the trimmed mean measure came in stronger. However, the details suggest that some of the upside pressures on inflation in Q2 were a result of one-off factors (tax increases and higher insurance premiums) and higher energy costs, rather than broad-based inflationary pressures due to capacity pressures."
"Moreover, the RBA could take comfort in the gradual moderation in non-tradables inflation over recent quarters. The upside pressure on inflation from house prices continues to be felt, and we believe this hinders any willingness for further rate cuts."
"Moreover, part of the increase in inflation is due to the impact from the lower AUD compared with the same period last year which has pushed tradables inflation higher. However, these pressures should abate in Q3."
"We continue to believe that the RBA is on hold until mid-2015. AUD appreciated to 0.943 from 0.939 on the release, as some investors reversed their expectations that the RBA could cut rates at some point this year."