Weekly Market Commodity Report week commencing 26th Oct

The RBA’s minutes last week turned out to be reasonably dovish, the statement very tentative with no definitive comments that are typical of an RBA that is pre-empting an imminent rate cut. With RBA communications it’s not always about what they say, but also about what they don’t and I’m not sure there is the justification for an easing just yet.

It’s pretty clear that the RBA is considering whether they need to ease, or not, rather than whether they need to tighten, or not, as was the case only 2 months ago, and that is primarily due to events in Europe.

The RBA noted that an improved inflation outlook, if confirmed by further data, would increase the scope for monetary policy to be eased. The “further data” will be this Wednesday‘s CPI which, if low, could provide the RBA with an excuse to cut rates. That however still remains an outside possibility. The RBA also said that an assessment would be reviewed based on developments in international financial markets.

So, along with this week’s CPI data that may give the RBA the fuel it needs to cut rates, what is happening in Europe will obviously also be a factor on Melbourne Cup Day’s consideration as to whether the RBA will ease or not.

Click here for this week’s Treasury Commentary.

Rudy Boeff

Treasurer | Rural Bank Limited

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