18 Nov 2015
AUD: Wage prices unchanged while RBA’s Debelle sounds optimistic - TDS
FXStreet (Delhi) – Prashant Newnaha, Rates Strategist at TD Securities, notes that RBA’s Guy Debelle’s speech to the Bloomberg Conference on FX and Interest rate benchmarks made no reference to monetary policy.
Key Quotes
“Question time was more interesting. He said he did not have insight into whether or not the Fed will hike rates in Dec, but said there is ‘no excuse’ for market participants to not be prepared for a Fed hike given the rise “has been talked about ad-nauseum”. More interesting were his comments that the Aussie is not being held as a substitute for the RMB and that the RMB’s inclusion would not hurt flows into Australian debt. Debelle said the motivation to hold Aussie was to diversify away from the G3 in terms of reserves. In particular he said “ I don’t see the renminbi as sort of cannibalising that demand.”
“The Wage Price Index for Q3 was unchanged from Q2 and was spot on market expectations, rising 0.6%/qtr, to be up +2.3%/yr. keeping wage growth in annual terms at the lowest levels since Sep 1998 when records began. Private sector wages increased 0.5%/qtr to be up 2.1%/yr, also the lowest rate of wage growth since the series began. With core inflation at 2.1%, this implies real wage growth is non-existent. Today’s number will not alter the RBA’s forecasts.”
Key Quotes
“Question time was more interesting. He said he did not have insight into whether or not the Fed will hike rates in Dec, but said there is ‘no excuse’ for market participants to not be prepared for a Fed hike given the rise “has been talked about ad-nauseum”. More interesting were his comments that the Aussie is not being held as a substitute for the RMB and that the RMB’s inclusion would not hurt flows into Australian debt. Debelle said the motivation to hold Aussie was to diversify away from the G3 in terms of reserves. In particular he said “ I don’t see the renminbi as sort of cannibalising that demand.”
“The Wage Price Index for Q3 was unchanged from Q2 and was spot on market expectations, rising 0.6%/qtr, to be up +2.3%/yr. keeping wage growth in annual terms at the lowest levels since Sep 1998 when records began. Private sector wages increased 0.5%/qtr to be up 2.1%/yr, also the lowest rate of wage growth since the series began. With core inflation at 2.1%, this implies real wage growth is non-existent. Today’s number will not alter the RBA’s forecasts.”