RBA: On hold during 2019, with risk now shifted to a rate cut - Wells Fargo

According to analysts from Wells Fargo, the Reserve Bank of Australia (RBA) appears unlikely to follow other central banks rate hikes and it should maintain its broadly neutral policy stance and keep rates on hold for the foreseeable future.

Key Quotes: 

“We believe the RBA will be on hold, or potentially cut rates, as the RBA looks to support growth and address any imbalances. At this time, we believe the central bank will maintain a relatively neutral monetary policy outlook. We expect to see the RBA on hold in 2019, with risks now shifted to a rate cut. Should a resolution to the U.S.-China trade dispute occur, this could be a catalyst to adjust our outlook, as economic pressures from China would likely be somewhat alleviated. This could help demand for Australian goods and services and would likely lead to a partial recovery in Australia’s growth prospects and could attract new capital flows through an improved sentiment channel.”

“Lower interest rates and tempered economic prospects should keep the Australian dollar subdued in the short-term, while any resolution to U.S.-China trade tensions may help the currency strengthen as some economic pressure from China gets relieved.”