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The RBA leave the cash rate unchanged for now......

Written by Sam Coxhead on April 3rd, 2012.      0 comments

2:50 PM (AEST) In what ended up being priced close to a 50/50 cal by the market the RBA has made the decision to leave its cash rate unchanged at 4.25%. In what is a well worded statement they acknowledge the slowing domestic demand, but want to see the update to date pricing pressure before easing monetary conditions. The crucial couple of sentences from the final paragraph flag their intentions.
 “The Board's view was also that, were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy. At today's meeting, the Board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.”
The quarterly inflation number will be released on 24 April, and this is likely to be the key release after the employment numbers next Thursday. The next RBA monetary policy meeting is on Tuesday May the 1st.
The AUD saw initial demand following the unchanged announcement, but quickly reversed the move as the market was able to read and digest the statement. This statement is certainly the outcome was that was going to offer the least reaction from the market.
In offshore action overnight the market sentiment remains mixed. The disconnect being seen to start the 2nd quarter is quite strange. As equity markets hit their highest levels since 2007, unusually, the YEN surged higher as the US dollar came under pressure, and this fed its way through the foreign exchange markets.
Demand was also fickle for the AUD as the prospect of the RBA decision loomed. Earlier today the retails sales numbers showed a tepid .2% rise which was band on expectations.
The NZD saw mixed sentiment in comments from the IMF. It stated that the RBNZ should maintain its accommodative monetary policy stance as the pace of the recovery remains modest. It does however see the increase in the pace of growth as the earthquake rebuild gathers momentum.
          Past 24 hours
  Current level Pre-RBA  % Chge since RBA   Low High
NZD/USD 0.8242 0.8234 0.10%   0.8178 0.8265
AUD/USD 1.0407 1.0433 -0.25%   1.0361 1.0449
NZD/AUD 0.7920 0.7893 0.34%   0.7866 0.7915
AUD/NZD 1.2626 1.2669 -0.34%   1.2634 1.2713
NZD/GBP 0.5139 0.5135 0.08%   0.5096 0.5149
NZD/EUR 0.6178 0.6175 0.05%   0.6127 0.6191
NZD/YEN 67.50 67.52 -0.03%   67.23 68.16
NZD/CAD 0.8157 0.8152 0.06%   0.8146 0.8192