Reserve Bank Governor Glenn Stevens last week presided over his final RBA Board meeting where the official cash rate was left unchanged at 1.50%. After delivering 50 basis points of easing since early May, it was always likely the RBA would leave the cash rate unchanged in September, in line with the expectation of the great majority of market economists.
Althoughthis was his last meeting, no-one is suggesting that the occasion distracted the RBA Board from its cash rate setting task. Likewise, no meaningful change to the RBA's near-term policy outlook is expected when the new governor, Philip Lowe takes over (on 18th September) and chairs the next rates decision in early October.
This chart below from Bloomberg highlights the Australian dollar and official cash rate over Stevens’ decade-long tenure as governor. While the Aussie is largely unchanged, Australia’s official cash rate is dramatically lower.
The market retains a view that there is still one (or maybe two) rate cuts left in the RBA, but we have to wait until mid to late next year. This view is based on the premise that the slowing housing sector will place pressure on economic and jobs activity in 2017 and that inflation remains low.