RBA Interest Rate Decision (March 2019)


Posted on: 2019-03-05 (Day) By BCR Market Event


 

The Reserve Bank of Australia kept the interest rate at a record low of 1.5% as expected in February’s meeting.  It is the longest policy pause in the reserve bank’s history. According to the economists’ forecast, the stance of monetary policy likely to be held in March’s meeting to achieve the inflation target over time. The reverse bank also noted that the low level of interest rates is continuing to support the Australian economy.

Australian Interest Rate (%)

 

 

BoE Interest Rate Announcement History

 

Date                                      Previous              Consensus          Actual

05 Mar 2019                       1.5%                     1.5%

05 Feb 2019                        1.5%                     1.5%                   1.5%

04 Dec 2018                        1.5%                     1.5%                    1.5%

06 Nov 2018                        1.5%                     1.5%                    1.5%     

02 Oct 2018                         1.5%                     1.5%                    1.5%

04 Sep 2018                        1.5%                     1.5%                    1.5%

07 Aug 2018                        1.5%                     1.5%                    1.5%

03 Jul 2018                          1.5%                    1.5%                    1.5%

05 Jun 2018                         1.5%                    1.5%                    1.5%

01 May 2018                       1.5%                    1.5%                    1.5%

 

 

Opportunities can be found in the statement

 

Inflation Rate

“Inflation remains low and stable. Over 2018, CPI inflation was 1.8 per cent and in underlying terms inflation was 1.75 per cent. Underlying inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual and to take a little longer than earlier expected. The central scenario is for underlying inflation to be 2 per cent this year and 2.25 per cent in 2020.” Referring to RBA’s Statement on Monetary Policy – February 2019.

A better-than-expected annual inflation rate is showing a reading of 1.8% (YoY) in the last quarter of 2018. Slightly eased from last reading of 1.9%. It was the lowest inflation rate since Q3 in 2017, mainly due to a slowdown in cost of transport. However, further progress in having inflation return to target is expected, although this progress is likely to be gradual.

Australian Inflation Rate (%)

 

GDP

 “The central scenario is for the Australian economy to grow by around 3 per cent this year and by a little less in 2020 due to slower growth in exports of resources. The growth outlook is being supported by rising business investment and higher levels of spending on public infrastructure. As is the case globally, some downside risks have increased. GDP growth in the September quarter was weaker than expected. This was largely due to slow growth in household consumption and income, although the consumption data have been volatile and subject to revision over recent quarters. Growth in household income has been low over recent years, but is expected to pick up and support household spending. The main domestic uncertainty remains around the outlook for household spending and the effect of falling housing prices in some cities.” Referring to RBA’s Statement on Monetary Policy – February 2019.

The GDP (YoY) in Australia expanded 2.8% in the Q3 of 2018, this is the weakest annual pace of expansion within the year. Uncertainties remaining from external global economies. In response to the international trade policy of US, the economic outlook of households, businesses and financial markets will be influenced significantly.

Australian GDP Annual Growth Rate (%)

 

Unemployment Rate

The labour market remains strong, with the unemployment rate at 5 per cent. A further decline in the unemployment rate to 4.75 per cent is expected over the next couple of years. The vacancy rate is high and there are reports of skills shortages in some areas. The stronger labour market has led to some pick-up in wages growth, which is a welcome development. The improvement in the labour market should see some further lift in wages growth over time, although this is still expected to be a gradual process.” Referring to RBA’s Statement on Monetary Policy – February 2019.

The Unemployment rate stood at 5% in January 2019, matching market expectations. It is the lowest among 6 years. A further gradual decline of the unemployment rate is expected over the next couple of years. Wages growth increased and likely to drift upwards. Also, it is expected to grow gradually in the foreseen future.

Australian Unemployment Rate (%)

 

 

Technical View

The Aussie is remaining in the downward trend against the greenback. However, the pair is supporting by 0.70 key level. In the daily timeframe, indicators are consolidating near the neutral level for both MACD and RSI. The MA system is remaining in the bearish order. The price is showing its bearish stance as it is moving below the MA system. It is a decent sigh for the pair to point South. Focus on 0.70 key level for further movement. Also, keep eyes on the progress of US-China trade war which will affect the Aussie dollar.

AUDUSD D1 Chart