RBA decides to keep rates unchanged - for now
Overnight, the RBA delivered its latest monetary policy decision and kept its cash rate unchanged at 0.75% for now. Its key factor in this was that it believed that time is needed for the previous rate cuts to feed into the economy, so standing pat, for now, was a reasonable course of action to take.
Looking ahead, we have already seen a number of banks suggesting more rate cuts are coming next year. Last week, Westpac issued a note looking for 2 more cuts in 2020, which would take the cash rate down to 0.25% with the likelihood of QE also higher due to the global impact on the Australian economy. Overnight, banks said another cut was likely in February, but UBS has said that rate cuts are being 'over aggressively' priced in.
On today's decision, governor Lowe said that weak household income growth will impact on spending ahead, so any pick up in wage growth would be a welcome development. Expect the jobs report to be influential on the AUD in coming releases. However, despite seeing global risks lessening recently, the RBA governor still sees risks as tilted to the downside.