17 Feb 2015
Get ready for further cuts by the RBA – JP Morgan
FXStreet (Edinburgh) - Analysts at JP Morgan believes the RBA will cut further its repo rate in its next meeting in early March.
Key Quotes
“We had recommended being short AUD heading into the RBA meeting given our view that risks were biased towards a cut”.
“The RBA indeed delivered, cutting the cash rate by 25bp to a record low and expressing a strong preference for a lower currency”.
“Subsequent data—weak NAB business confidence, unemployment rate unexpectedly increasing to its highest since 2002— reinforced the case for further easing”.
“Moreover, our economists note that the RBA’s GDP forecasts are still prone to disappointment”.
“Our base case is for another 25bp cut in the May meeting, but the risk is that it could cut sooner, as early as March 3rd”.
“Admittedly, the market reflects this risk and is currently pricing in a 65% chance of a 25bp rate cut in the March meeting. Nonetheless, we think that odds of a more-dovish-than-expected stance from the RBA are high”.
Key Quotes
“We had recommended being short AUD heading into the RBA meeting given our view that risks were biased towards a cut”.
“The RBA indeed delivered, cutting the cash rate by 25bp to a record low and expressing a strong preference for a lower currency”.
“Subsequent data—weak NAB business confidence, unemployment rate unexpectedly increasing to its highest since 2002— reinforced the case for further easing”.
“Moreover, our economists note that the RBA’s GDP forecasts are still prone to disappointment”.
“Our base case is for another 25bp cut in the May meeting, but the risk is that it could cut sooner, as early as March 3rd”.
“Admittedly, the market reflects this risk and is currently pricing in a 65% chance of a 25bp rate cut in the March meeting. Nonetheless, we think that odds of a more-dovish-than-expected stance from the RBA are high”.