RBA chiefs joke confuses economists An interest rate cut in August, or not? After Reserve Bank governor Glenn Stevens remarks on Wednesday that the central banks board had deliberated for a "very long time" about its decision to keep rates on hold, ANZ economists revised their forecast, tipping a rate cut in August, and another one in November. But, as Fairfax Media reported on Wednesday, Mr Stevens comments were understood to have been made in jest, meant as a humorous aside and not as a commentary on what actually happened at Tuesdays board meeting. Advertisement ANZ this morning said it phoenix suns 8s for sale was reviewing its decision and would issue an update later on Thursday.
"Given this information has been shown to be false, we should revert to our view of the day before yesterday that the RBA will cut rates again, but probably not until slightly later in the year as, for now, the currency is doing much of the easing work for the Bank and that the bias of risks for Australian official interest rates in 2014 is still assessed to be to the down side," ANZ said in its morning note. "We will consider our position this morning and issue a further statement." Financial markets are pricing in a 53 per cent chance of a rate cut in August, up from around 45 per cent before Mr Stevens remarks yesterday. The Australian dollar was trading at 91.13 US cents this morning, having recovered from its drop to a 34-month low of 90.37 US cents yesterday in the wake of Mr Stevens jest. It was also trading slightly higher against other currencies this morning, trading at 59.6 British pence, 90.93 Japanese yen and 69.9 euro cents.
The dollar has fallen more than 13 per cent against these currencies since mid-April. NAB economists said this morning they were not yet revising their cash rate forecasts after Mr Stevens quip. "After all, if the RBA deliberated and decided against a rate cut yesterday, presumably something will need to chance between now and August for them to act next month," they said in a morning note. Financial services provider TD Securities said they were lowering their cash rate forecast to 2.5 per cent by the end of the year, as Mr Stevens full speech was unusual in that it did not take the normal "glass half full" approach.
"Secondly, the RBA boards insistence that the [Australian dollar] remains high despite the 10 big figure correction in recent months bugs bunny 8s for sale speaks to us that the bank is determined to assist the currency lower in any means possible," TD Securities Asia-Pacific Research head Annette Beacher said. Mr Stevens comments jordan 13 squadron blue on the long rate decision "deliberations" also got bit of traction overseas, given the attention the Australian dollar has received from international investors over the past few years. The Financial Times Sydney correspondent quipped in a short piece: "Central bankers can do many things but they should never, ever attempt humour". "You can see why people werent rolling around in the aisles. In fact there was downright confusion after Stevens delivered the gag in his usual deadpan style," Neil Hume wrote about the so-called joke.
"Still he who laughs last, laughs longest. The RBA has been attempting to talk down the dollar for months without, it has to be said, much impact. So perhaps humour is the way to go after all." Stay tuned for RBA deputy governor Phil Lowes speech on "Some Tensions in Financial Regulation" later today. It may sound dry, but the markets will be watching.
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