» Central Bank Outlook: RBA Policy Held, Dovish Tones Decision Economics

Central Bank Outlook: RBA Policy Held, Dovish Tones

Posted September 4, 2012 by rvillareal

Australia: RBA Policy Held, Dovish Tones Emerging?


  • As was universally expected, the Reserve Bank of Australia (RBA) decided to keep the Cash Rate unchanged at 3.50% at its meeting in September. Policy has been on hold since rate cuts totaling 75 bps in May and June.
  • The Statement showed dovish changes, beginning with a more pessimistic take on the global outlook—particularly softer data in China. However, domestic growth was described as being close to trend with strong domestic consumption and investment, and a resilient labor market.
  • Notably, in the final paragraphs of the statement, the RBA also highlighted that the Australian dollar had declined of late. This is somewhat unsurprising as the AUD is a commodity currency. However, with the trends of the slowdown in emerging markets, commodity price declines, and weakening AUD likely to continue, the bias going forward tilts towards easing.  
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