RBA: 1.5% and see you in February - TDS

Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, points out that RBA has left the cash rate at 1.5% on the expected lines with the last adjustment being -25bp in August 2016, adding to the record run of sitting on the sidelines.

Key Quotes

“The RBA's next formal monetary policy communication is 5 February for the policy statement, and 8 February for the Statement on Monetary Policy.”

“Today's policy statement contained little new information. With all eyes on declining house prices there was extra colour around credit: "Growth in credit extended to owner-occupiers has eased to an annualised pace of 5–6 per cent. Mortgage rates remain low, with competition strongest for borrowers of high credit quality." This is central-bank speak for loans increasingly going to those with the strongest capacity for repayment.”

“Today's Q3 GDP partial data reports were solid: net exports adding +0.4%pts to GDP (TD +0.25%pts) and solid government spending (consumption +0.5%, investment +3.4%, adding +0.3%pt to GDP). Our Q3 GDP tracking is +0.7%/q (mkt +0.6%/q) leaving annual GDP at 3.4%/y. The RBA in Nov targeted 3½% growth for H2 2018, so on track.”

“Consensus and TD expects the 1.5% cash rate to prevail through to Q4 2019, implying no change to these statements for some time.”