WHAT THE ECONOMISTS SAY
Bill Evans, Westpac For us by far the most significant aspect of the (RBA's) statement was the decision to move back to a neutral bias from the consistent easing bias that we have seen in recent statements.
Adam Boyton, Deutsche Bank The lack of any forward guidance in the final paragraph has us concluding the statement is a little less dovish than the market might have been expecting ... The case for the next rate cut needs to be built from scratch.
Ivan Colhoun, ANZ It's an evolution of recent thinking rather than a revolution. Their statement on monetary policy on Friday will be very closely watched by the market because it will give more information about what they're thinking about the outlook for growth and perhaps the outlook for unemployment.
Kieran Davies, Barclays We are surprised that the RBA did not repeat the easing bias as it would have placed some additional downward pressure on the exchange rate.
Paul Bloxham, HSBC Markets are pricing in a further cut this year. While this is possible, we are of the view that [Tuesday's] cut could be the last for this easing phase, as the lower Australian dollar is doing a lot of the work for the RBA already and is also an upside risk to the inflation outlook.
Scott Haslem, UBS First, there was no forward guidance. Little should be read into this, as it's relatively standard practice to provide minimal guidance on a cut, as was the case when they last cut in May ... We think the RBA is now on hold here for several months.
Greg Gibbs, RBS The risk is that [the dollar] continues to squeeze up as the market unwinds the risk of further near-term cuts. The RBA is in watch and wait mode. They would like to keep the dollar low but understand that cutting rates too quickly such that it projects a bottom is close will be counterproductive.