Here is a quick view preview of what the big 4 Australian banks are saying to expect from the Reserve Bank of Australia next week (meeting Tuesday April 4)
WESTPAC:
We have argued that conditions around employment and household incomes are consistent with lower rather than higher rates but that housing market conditions preclude lower rates. The Reserve Bank will also be mindful of its experience in 2015/16 when the application of macro prudential policies around investor loans sharply slowed house price inflation. Those policies were complemented by the banks raising rates on investment loans and the standard variable mortgage rate. The combination proved effective, with house price inflation slowing abruptly from a double digit annual pace to flat We remain comfortable with our view that rates will remain on hold in both 017 and 2018.
ANZ:
If inflation is already low and you are conscious of the feedback this is having into cost pressures, then the last thing you do as a policy maker is risk tightening prematurely. We think the bank is a long way from even considering a rate hike, even with a more positive global environment. Indeed, with the data revealing a tick-up in the unemployment rate after the RBA board meeting, we think the prospect of another rate cut remains higher than that of a hike.
NAB:
The RBA is becoming increasingly focused on financial stability considerations, particularly household balance sheets in the context of a re-acceleration in house price growth in Sydney and Melbourne amidst elevated levels of household debt. Recent comments from RBA officials raise the possibility that macro-prudential measures may be stepped up and we now consider a further rate cut as unlikely in this environment. We have removed our expectation of a 25bp rate cut in late 017, although continue to flag the risk of further monetary policy easing at some point given our concerns about economic growth and the labour market in 2018.
CBA:
We see little chance of further policy easing despite core inflation running below target and the unemployment rate being above the level associated with full employment. The consistent message rom the RBA over the last six weeks has been that rate cuts are off the table. In our view, it would take a sustained loss of momentum in job creation or a fall in dwelling prices for Lowe to entertain he idea of taking the policy rate lower. Neither outcome is in our central scenario and as such, we see the RBA on hold over 2017 and well into 2018.
via Anthony Barton at LiveSquawk @AntBarton89
