The latest Reserve Bankof Australia (RBA) Board Minutes were released last week and suggest the RBA is comfortably on hold. While the RBA remains open to the possibility that rates may still need to be lowered further, this is a very mild “passive” easing bias and would require a weaker outlook for the economy than the RBA’s current (downgraded) growth forecasts.
The Minutes were a little more positive and highlighted the pick-up in consumer and business confidence and some other generally more positive forward-looking economic indicators. The RBA notes that the rate cuts to date are finally gaining traction in the economybut remains concerned about the high Australian Dollar.
The RBA Governor gave a speech on the Australian Dollar last week. In it he did not rule out possible RBA intervention in the FX market to correct a misaligned (too high in his opinion) exchange rate, stating that the RBA was “open-minded on the issue”.
That said, I think we are a long way from any potential intervention by the RBA, nor does it look imminent or probable in my view.