There are few rumours in the market this morning that we might see a change in forward guidance in the RBA statement this afternoon. The argument goes that if a rate hike is coming first half next year then the ground will need to be prepared today. It derives from a paragraph in Glenn Stevens’ recent speech:
The evolution of language should be expected to continue, as more time passes and further information comes to hand. Long before any thought were to be given to an increase in rates, it would probably be sensible for the Board to cease references to a future ‘period of stability’ and revert to the more normal formulation that the stable policy settings ‘remained appropriate’ or something like that. Such an evolution would amount to no more than a recognition that a ‘period of stability’ had in fact already been occurring and wasn’t entirely in the future, but wouldn’t imply any particular change in the Bank’s views about the future course of policy. It should go without saying that those seeking to understand our thinking should, in any event, look not just at the wording in the post-Board statement, nor just that in the minutes, but also at the whole analysis of the economy and the outlook in the regular Statement on Monetary Policy.
There is a little bid under the dollar this morning, perhaps associated with this, and in complete contradiction to the hoped for outcome from Glenn Stevens:
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