Today’s statement by the RBA Governor is, as usual, short and a very useful read for Aussie currency and share traders
You can read the statement by Clicking Here
2 Sentences in this statement stand out. I’ve copied them below and the emphasis added is mine
Looking ahead, the peak in resource investment is likely to occur next year, and may be at a lower level than earlier expected. As this peak approaches it will be important that the forecast strengthening in some other components of demand starts to occur.
For much of the commodity boom, Australian monetary policy has operated on the basis that some slack in other parts of the economy was needed to allow room for demand pressures created by resource investment.
However, when circumstances change central banks and traders need to change their outlook. The sentences above indicate that the bank will now be more concerned to ensure that the domestic economy is growing at trend capacity.
This in turn makes the Australian economy far more like other developed world economies. Most of these have significantly lower interest rates than ours.
As usual much depends on China. But unless our terms of trade turn around or mining companies again ramp up plans for large scale infrastructure investments, the RBA will be targeting a stronger domestic economy. I reckon this tilts probabilities in favour of further rate cuts – possibly several