RBA Interest Rate Decision (April 2019)


Posted on: 2019-04-01 (Day) By BCR Market Event


 

Is Aussie Ready For The Bounce?

The Reserve Bank of Australia kept the interest rate at a record low of 1.5% as expected in March’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 April’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.

RBA Interest Rate (%)

 

 

RBA Interest Rate Announcement History

Date                                      Previous              Consensus          Actual

02 Apr 2019                        1.5%                     1.5%

05 Mar 2019                       1.5%                     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%

 

 

Opportunities can be found in the statement

 

Inflation Rate

“Inflation remains low and stable. 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 2¼ per cent in 2020. Headline inflation is expected to decline in the near term because of lower petrol prices.” Referring to RBA’s Statement on Monetary Policy – March 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

 “Growth in the Australian economy slowed over the second half of 2018. The central scenario is still for the Australian economy to grow by around 3 per cent this year. The growth outlook is being supported by rising business investment, higher levels of spending on public infrastructure and increased employment. The main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling housing prices in some cities. A pick-up in growth in household income is nonetheless expected to support household spending over the next year.” Referring to RBA’s Statement on Monetary Policy – March 2019.

The GDP (YoY) in Australia expanded 2.3% in the Q4 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 Australian labour market remains strong. There has been a significant increase in employment and the unemployment rate is at 5 per cent. A further decline in the unemployment rate to 4¾ 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 – March 2019.

The Unemployment rate dropped to 4.9% in February 2019, beating market expectations. It is the lowest jobless rate since June 2011. 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, 0.70 key level is supporting the pair from plunging further. In the daily timeframe, indicators are showing neutral stance for both MACD and RSI. The MA system is remaining in the short order. The price is still heading South in the Long-term. Focus on 0.720 barrier, this will be the breakthrough point of the long order. Also keep eyes on the progress of US-China trade war, which will affect the Aussie dollar.

AUDUSD D1 Chart​​​​​​​