- The RBA reiterated that rates will probably stay low for an extended period.
- Local futures markets would have expected nothing less.
- AUD/USD reaction was very muted.
The Australian Dollar was steady Tuesday following the release of minutes from the last Reserve Bank of Australia policy meeting which cautioned again that interest rates were likely to remain low for ‘an extended period.
The minutes covered the August 6 meeting at which the Official Cash Rate was held at the new record low of 1% in place since July’s reduction, itself one of two back-to-back monthly cuts. The RBA said it would consider further policy easing ‘if needed’ but that it would have to assess developments in both the domestic and global economy before considering another cut.
The Australian futures market now fully prices two further quarter-percentage-point reductions by early 2020. However, the RBA continued to place great emphasis on the labor market in its deliberations and that has been shown since the last policy meeting to have held up rather well. While the RBA continues to flag up the importance of these numbers it is perhaps difficult to see further cuts being delivered for as long as job creation remains strong. Read More....