Market focus will largely remain on the sharp decline in global oil prices and equity markets in the near term. These developments are likely to continue to pressure the $A. In this week’s publication, we examine the detailed interview with RBA Governor Stevens, published on Friday. The Governor wants a lower $A (and nominates a level closer to US$0.75). More interestingly for rate markets, the Bank seems to be evolving its view towards considering whether it can do more to boost confidence. The Bank will examine this question in the New Year, when it has two further months of data. To us the picture seems similar to that of 1996 when Governor Bernie Fraser’s Board decided that the economy could afford to grow more quickly without creating inflation pressures
Read the full report: Market Research