This morning in our morning note we stated:
“We think they will be indicating an end of the quantitative easing is near, and now that key indicators of inflation and employment are within their target range, they will be watching for wage growth as the final indicator for raising rates.”
“It is possible they will stick to their language of no rises until 2023 as they want to see the current indicators sustained in their range.“
This afternoon the RBA announced:
“It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.”
“It also decided to cease further purchases on the bond purchase program with the final purchases to take place on the 10th of Feb.”
“Wages growth also remains modest and its likely to be sometime yet before aggregate wages growth is at a rate consistent with inflation being sustainably at target.”
The market seemed to like the announcement, jumping some 40 points in the 30 minutes after the report.
Perhaps because they also stated that:
“The Board is committed to maintaining highly supportive conditions to achieve its objectives of a retuen to full employment in Australia and inflation consistent with the target.”
Over the next 24 hours, commentators and analysts will read over the RBA statement several times and we will get their take tomorrow, but for now we like the consistent and sensible approach our RBA takes.
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