RBA Preview: Will They Turn Dovish?

Posted Tuesday, February 5, 2019 by
Rowan Crosby • 1 min read

The rumblings around the press at the moment are that the RBA is under increasing amounts of pressure to actually be cutting rates – not raising them.

That stands in contrast to what the RBA have been signalling for some time. Some big names including Morgan Stanley have come out recently and said exactly that.

However, there is also the counter argument that the RBA simply do not want to cut rates as they do need to see rates at ‘normal’ levels in the near future. We’ve been stuck at 1.5% for what is now years and that is a fair way off historical levels.

But despite all the murmurings, I strongly doubt they would change their policy stance to one that would be looking at rate cuts.

More likely I feel that we might see a more neutral stance. That allows them to do as they please.

Either way a neutral stance would likely be bearish for the AUD/USD. As it means that hikes are not forthcoming.

It is also an admission that in fact, the property crash is a concern. And the weak inflation that is still under the target band of 2-3% isn’t getting the traction that the economy needs at the moment.

While we will see no official change today, it is clearly an important meeting of the RBA.

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