A round-up of some initial analyst responses to the decision from the Reserve Bank of Australia today to leave rates on hold in March

Westpac:

  • the Governor has adopted a strong easing bias, effectively indicating that another cut can be expected over the next month or two

History shows us that the language used in (the final) paragraph (of the accompanying statement) is the strongest form of easing bias.In the sixty seven post meeting statements ( excluding today) by the governor since the beginning of 2009 "for the time being " has only been used on eight occasions.In that time every governor's post meeting statement that has included the term "for the time being" has preceded a rate move. On six occasions it was the following month and on two occasions it was two months later.

  • That signal puts the next move firmly into the April/May window

JP Morgan:

  • What held the Board back from delivering another easing today?
  • The only reasons that are obvious from a reading of the commentary are the fact that they cut last month, and, related to that, housing
  • The housing market in Sydney, in particular, did see a strong initial response to the February easing, which is probably making officials a little jittery, and keen to sit back and observe how the spillovers accumulate

CBA:

It was a short statement without much detail in it. We still think 2.0 per cent is the terminal rate, but we've pushed the timing back to May on the usual post-CPI, pre-SMP timetable they seem to like.

Citi:

  • Say a weaker-than-expected Q4 GDP would not be enough for another cut
  • But a further rise in unemployment rate "could see April go live"
  • Leaning towards a cut in May ... when RBA "will have its updated economic forecasts, which we suspect will show a further slight downgrade to the growth outlook"

NAB:

  • They'll just sit back and see how the economy pans out after the rate cut of last month
  • But there's a strong easing bias there
  • If we continue to see domestic demand remain quite soft they won't hesitate to cut again in the coming months
  • They're clearly signalling that if we continue to see low levels of confidence they will go again
  • We're still comfortable with our view that they'll cut again in the next couple of months

ANZ:

  • The RBA retains a strong easing bias using the terminology of 'time being' and indicating that 'further easing of policy may be appropriate over the period ahead'
  • We believe they will act on this easing bias at the next meeting in April
  • The Statement highlights concerns about non-mining growth momentum and the potential for further upward pressure on the unemployment rate
  • Importantly, the RBA board notes risks associated with the effect of low interest rates on the housing market.
  • The Statement makes two points on this; strong house price gains and investor activity is mainly an issue in the Sydney market and that they will work with other regulators (presumably APRA) to attempt to mitigate the risks to the financial system and the broader economy.

Deutsche Bank:

  • The accompanying statement today "is about as much forward guidance as one is ever likely to get from the RBA
  • Says a cut in April is "more likely than not"