Daily Commentary BY THE CURVE TEAM –

Daily Insights – RBA Dovish

17 November, 2021

RBA Dovish

  • Markets were unmoved following Lowe’s dovish comments yesterday.
  • The minutes stated that “the risks to the inflation forecast had changed” due “to the persistence of the current disruptions to global supply chains and to the behaviour of wages at the lowest unemployment rate in decades”.
  • This prompted the RBA to end the yield curve target, as they could not be certain the cash rate would still be 0.10% in 2024.
  • However, “the central scenario for the economy continued to be consistent with the cash rate remaining at its current level until 2024”.
  • Markets are holding firm in pricing in cash rate rises as soon as mid next year.
  • Another noteworthy point from Lowe was noting that Australia’s inflation is different to overseas. We are coming from a lower starting point and have been less acutely affected by supply chain disruptions and energy prices.
  • However, if other central banks hike rates, it makes it easier for the RBA to do the same as the Australian Dollar would depreciate.

US Retail Sales

  • Were very strong overnight, up 1.7% for October.
  • This will only further intensify pressures for the Fed to tighten sooner than is currently planned.

Josh Stewart

Associate - Money Markets