Via Barclays:
- We expect the RBA to remain patient and wait for signs of a more broad-based recovery across businesses and household incomes before firmly signalling any change in monetary policy stance
- Governor Lowe clearly stated in his parliamentary testimony that, within the RBA, the preference is for rates to move up, not down, from current levels
- However, the bar for hiking rates is high, hence, rate hikes are likely to be “some time away”
- Further, board member Ian Harper indicated that the rate of growth, while improving, remains too slow to justify a rate hike
- We forecast the RBA will raise the policy rate by 25bp at the August 2018 MPC meeting followed by a 25bp rate hike in November
“Some time away” is never. Indeed the prospect of 2018 rate cuts is rising.
