Michele and her colleagues are full of hot air!RBA leaves cash...

Michele and her colleagues are full of hot air!

RBA leaves cash rate unchanged at 4.35%, as expected

"The decision is as you would expect and so is the language for the most part. However, the RBA is putting some emphasis on the upside risks to inflation. And that is likely to guard against markets thinking that surely the next move will be a rate cut, particularly after the softer Q2 CPI report."

In June, the RBA noted that:

"The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out."

Today, they changed that up to:

"Data have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out. Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range."

"The language mainly reinforces their stance in keeping the cash rate unchanged. But it also means that we aren't likely to expect a move in September as well. That said, it's not like markets were pricing in anything for next month anyway. The odds of the RBA leaving policy as it is in September are at ~88% currently."