RBA’s Bullock: Rates are at the right level to get inflation back to target

• Recent data is proving to be bumpy
• We are taking a longer view
• Must be vigilant on inflation risks
• Believes that rates are at the right level to get inflation back to target
• Don’t think we necessarily have to tighten again
• But we can’t rule it out; if we have to, we will
• The right stance at the moment is to stay where we are and to observe the economy
• We might have to raise rates again, but it doesn’t mean we have to
• The board did discuss the option of raising interest rates

The message here is that they’re not in a hurry yet to turn towards rate hikes. However, the fact that they did discuss it today means that said option is definitely open. I reckon the takeaway here is that the RBA did not produce an explicit hawkish tilt today, which disappointed a small section of the market. But by keeping the door open for hiking again, it means that any retreat in the aussie currency should be more limited; all else being equal.

This article was written by Justin Low at www.forexlive.com.