Mr Stevens warned about the appreciation of the Australian dollar against the US dollar after the RBA left the official cash rate unchanged at 2 per cent.
“The Australian dollar has appreciated somewhat recently. In part, this reflects some increase in commodity prices, but monetary developments elsewhere in the world have also played a role,” he said.
“Under present circumstances, an appreciating exchange rate could complicate the adjustment under way in the economy.”
AMP Capital chief economist Shane Oliver said the RBA had “effectively reintroduced a subtle form of jawboning designed to try and push it [the Australian dollar] back down again”.
“The clear implication is that a further gain in the value of the Australian dollar could cause the RBA to act on its bias to cut interest rates again,” Mr Oliver said.
Mr Oliver said AMP Capital remained convinced the RBA would cut interest rates in the coming months.
“First, growth is likely to slow back to around 2-2.5 per cent as the contribution from housing fades reflecting falling building approvals and fading wealth effects at a time when mining investment is still contracting,” he said.
“Second, unemployment is likely to remain relatively high at around 6 per cent, with jobs growth slowing. Third, inflation is likely to remain at or below the bottom of the RBA’s 2-3 per cent inflation target.
“And finally, the recent rebound in the value of the Australian dollar is a threat to trade exposed sectors like tourism, higher education and manufacturing helping to fill the growth gap left by a slowing housing sector,” Mr Oliver said.
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