Credit Agricole Research discusses its reaction to this week's RBA policy meeting. .
"We think the RBA is being too optimistic with its forecasts and rhetoric and expect downward revisions to its GDP growth and inflation forecasts in the May SoMP and rate cuts to follow. Indeed, the RBA has said that it will continue to carefully monitor developments and ease policy further if needed. The Board also said that it was too early to determine how long-lasting the impact of the coronavirus on China’s economy. We look at commodity prices and interpret their large declines as reflecting the interruptions to global supply chains that will hurt the global and Australian economies," CACIB notes.
"The RBA will have three further opportunities this week to massage its message starting with RBA Governor Lowe’s speech, The year Ahead, on Wednesday as well as the publication of its SoMP and Lowe’s parliamentary committee testimony on Friday. So there is a chance for the RBA’s optimism to sound more measured...We see today’s AUD rally as an opportunity to get short," CACIB adds.