RBA Preview - August 2020: Massaging The Numbers

RBA Preview - August 2020: Massaging The Numbers

MNI Point of View:

• The Reserve Bank of Australia (RBA) will likely use its August monetary policy meeting to refine its forecasts surrounding both the local and global economic backdrops, while the Bank will almost certainly leave its monetary policy settings unchanged, meeting consensus expectations in the process. That would see the cash rate target left steady at 0.25%, with the 3-Year government bond yield target held at "around 0.25%."
• Bank communique continues to reflect a high degree of comfort with the current monetary policy stance, and general resentment towards the idea of negative interest rates.
• Commentary on the currency will likely be reserved for the SoMP/minutes of the meeting, with recent rhetoric pointing to the AUD having no notable dislocation from its fundamental valuation.
• The second-round COVID-19 developments in Melbourne/Victoria presents the most immediate threat to the domestic economy.
• When all is said and done, the Bank's hands remain tied by its proximity to its self-enforce lower bound in the cash rate. This, among other familiar matters, will leave those in Martin Place pointing the finger at the government when it comes to further stimulatory requirements, at least in the short term.

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RBA Preview - Aug 2020.pdf