The RBA signalled its shift to a neutral policy stance after the 4 February Board meeting. So the main task for today’sStatement on Monetary Policy (SMP) was to flesh out the thinking behind that shift. And to try and distil what wouldproduce a further step towards a tightening bias.The general tone in the RBA’s commentary is that they are a little more relaxed about growth prospects (at home andabroad) and a little less comfortable with the inflation outlook. The RBA’s comments that the QIV CPI “surprise” mayindicate less spare capacity in the economy than previously thought or widening margins are particularly telling. Notsurprisingly, the SMP reaffirms the belief that the “prudent” course of action is to leave interest rates alone for a while.
Read the full report: Economic Research
Commonwealth Bank