In a recent update, HSBC Global Research said the RBA is likely to keep the interest rate on hold as the depreciating Australian dollar loosens financial conditions.
HSBC chief economist, Australia and New Zealand Paul Bloxham said: “Currency depreciations may not work for every country, but the lower Australian dollar is already providing clear support for Australia’s growth.
“With the Australian dollar doing the work for them, we expect the RBA to be reluctant to cut rates further, despite the slowdown in China and the recent delay to the [US] Federal Reserve’s interest rate ‘lift off’.”
The Australian dollar has fallen six per cent in trade-weighted terms over the past three months and is now at a level the RBA is satisfied with.
Via InvestorDaily
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