Forex Flash: It will take more than a low CPI to see the RBA cut again

Forex Flash: It will take more than a low CPI to see the RBA cut again

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Forex Flash: It will take more than a low CPI to see the RBA cut again - NAB

FITITOL--> FXstreet.com (Barcelona) - RBA kept the rate unchanged at 3.50% without providing much guidance on future moves in the accompanying Statement. "Having cut by 75 bps over the past two months they obviously felt they could sit back this month and give the economy some time to absorb the recent cuts" says NAB analyst Spiros Papadopoulos.

"Domestically the RBA appears to have slightly upgraded their growth forecasts. The RBA also cut out the commentary this month of precautionary behaviour continuing amongst households and businesses. The commentary on the global economy was again downbeat - weak Europe, slower growth in China and modest growth in the US" explains Spiros.

Looking ahead, NAB expects the RBA will be cutting again, but it’s going to take more than just a low Q2 CPI in late July. As a reminder, Spiros notes: "The Q2 CPI is released on July 25, but the RBA did not highlight its importance for the August meeting in today’s Statement (unlike in April where the Q1 CPI was clearly linked to the May decision). That suggests that a low CPI alone in late July will not be enough to see the RBA cut again."