Australia dollar firms as RBA stands pat; NZ dollar on defensive
- Author: Zachary Reyes Mar 08, 2017,
Mar 08, 2017, 3:58
This could see the RBA again considering a further cut to interest rates late this year.
What is the RBA's view on the Australian dollar? However, there was no change in the guidance on the currency, which suggests that the current level of the A$ is not a major issue for the RBA. More increases in mortgage rates from banks, however, are likely reflecting finance market and regulatory pressure.
"Borrowing for housing by investors has picked up over recent months".
The RBA cash rate has remained at 1.50% for seven months now, yet term deposit and savings account interest rates continue falling.
While the RBA rarely comments directly on the exchange rate, it is clear they would prefer to see a lower AUD as opposed to the continuation of the recent strengthening trend.
However, despite today's decision to keep the cash rate on hold, many experts and economists believe that a cash rate hike is on the horizon. The Aussie dollar has already risen 5.7% against the greenback this year. "Headline inflation is expected to pick up over the course of 2017 to be above 2 per cent, with the rise in underlying inflation expected to be a bit more gradual", the statement said.
"We'd like the economy to grow a bit more quickly and we'd like the unemployment rate to come down a bit more quickly than is now forecast", he said.
He also gave us the closest we have seen to an official forecast on U.S. monetary policy where he noted: "Interest rates are expected to increase further in the United States". Lowe also mentioned that Australia's economy expanded by 2.4% in 2016 at A$1.7 trillion, partially backed by lower commodity prices and better consumption growth rate.
On the less encouraging side, he refers to the insipid growth in household incomes and linked to that effect the observation that employment growth has been concentrated in part time jobs.
On the asset side of equation, the RBA said housing market conditions varied considerably around the country, with conditions strong in some areas amid brisk price increases, whereas prices were falling in others.