May 7, 2013
Forex Flash: RBA should now leave rate at 2.75% in 2013, current account deficit may shrink to -2.5% - TD Securities
The RBA surprised the market with a 25bp rate cut to a record low 2.75% today, while consensus was toward an on hold decision. TD Securities analysts say that the communique suggests that the RBA is leaving the door open for further rate cuts, by stating that “...the Board has previously noted that the inflation outlook would afford scope to ease further...at today’s meeting the Board decided to use some of that scope”. “However, we note that the communiqué elsewhere was rather balanced, signalling no rush to follow up with another move. So despite the RBA remaining on an easing bias, we take today’s rate cut as our June cut delivered a month early”, wrote analyst Alvin Pontoh, leaving their cash rate profile for the remainder of the year flat at 2.75% at this point.
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