Reforms afoot at the Reserve Bank of Australia could complicate rate cut outlook

The news hit yesterday that the controversial reforms to the RBA would be going ahead:

• Australia’s government has secured support from Greens party to pass RBA reform law

For a rundown on what the reforms are, check this out:

• Reminder of what this is all about

Reuters have a piece up saying:

• Australian central bank reform adds new wrinkle to policy outlook

In brief:

Australia’s central bank is finally getting a major shake-up

changes include splitting the current RBA board into two groups with one dedicated to monetary policy and the other focusing on the central bank’s governance and operations. Analysts are assuming the new monetary policy committee would have some new members, perhaps changing the outlook for interest rate cuts.

And cites Goldman Sachs:

• “While our base case remains for the RBA to start cutting rates in February, the changes raise the uncertainty around the RBA’s reaction function going forward given potential new board personnel”

I agree there will be some new uncertainty, but I think its fair to say that the Bank won;t be cutting in February. Reserve Bank of Australia Governor Bullock spoke overnight:

• ICYMI – RBA Gov Bullock ruled out a rate cut

Current cash and inflation rates from the RBA website.

This article was written by Eamonn Sheridan at www.forexlive.com. Source