Overall, my assessment is that there is one big change, and that is to the financial conditions paragraph. The addition of a line that savers are taking more risk on the asset side amounts to an assertion that the influence of prior easing is still increasing. Risk taking on the asset side is one of the key channels through which monetary policy works (lower risk free returns, and folks will demand fewer low risk assets, and the flow of funds into riskier investments will boost growth).
The fact that households have been unusually careful this cycle is a part of the reason we have an unusually low cash rate. If behaviour changes, the RBA’s 2.5% cash rate is going to start feeling very stimulatory. The recent pickup in the housing market is the most obvious manifestation of this change.
The other changes were minor. The sentiment upgrade in the domestic economy section is mostly just a mark to market on the data change (the RBA doesn’t rate these surveys all that highly); and the claim the the Fed raised volatility is just plain wrong if you are talking about implied vols (and if you are not, you should be).
The removal of the comment that FX is ‘still-high’, despite the fact that it’s up ~5ppts was a bit odd. Whatever that RBA’s intention, doing so seems to open the upside for AUD, as the RBA no longer seems to be capping it was the (implied) threat of rate cuts if it gets too strong.
Here is my assessment by category:
global growth: no change, still below trend with a pickup expected.
commodity prices: no change, still down a bit but high relative to historical norms.
financial conditions: downgrade; the fed’s no-taper led to higher volatility (excet it didn’t, implied in FX, rates and equity options all declined).
domestic economy: upgrade, on a sentiment improvement (post election bounce? Or something more lasting?).
Financial conditions: upgrade, savers are taking more risks with their investments.
FX: neutral (weird), the decline was reduced 5ppts to 10%, but oddly they lost the bit about it being still-high.
Conclusion: unchanged, word for word.