After cutting rates for the first time in nearly seven years during its September 2nd meeting, the Reserve Bank of Australia stated that their previously restrictive monetary policy could “weaken [demand] more sharply than necessary,” an effect that would “deliver a faster reduction in inflation,” at “greater short-term economic cost.” The now dovish tone insinuates a changed RBA rhetoric – one that is now concerned with overshooting its hawkish stance on inflation. The minutes, however, gave no unequivocal direction as to future policy moves. The RBA is still expected to cut rates by an additional 25bp by year's end.
Written By Luis Gil, DailyFX.com
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Al Bawaba
