Comments from Westpac's Bill Evans on the Reserve Bank of Australia today

(In brief and bolding mine)

  • the Governor highlighted the two key forces that will be most significant in the Board's future decisions are: firstly, "whether the recent improvement in labour market conditions is continuing"; and secondly, "whether the recent financial turbulence portends weaker global and domestic demand"
  • Global market conditions have been elevated as important factors in the bank's thinking ... global volatility will be insufficient in its own right if there is no clear evidence of a feed through effect, particularly to domestic demand
  • To date the Bank appears to be gaining confidence around domestic economic momentum
  • Retained the moderate easing bias sentence: "Continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand"
  • Highlighting weakness in emerging market economies including China

Evans concludes that Westpac:

  • do not expect to see a sustained continuation of current market volatility and certainly do not anticipate financial volatility substantially weakening domestic demand
  • we do not believe that the conditions will be there (for an RBA rate cut)