What they did do was leave the clear easing bias in place, and in particular the final paragraph was totally unchanged (which as McCrann notes, is unusual).
Have we seen the final cut?
Maybe, but i doubt it, and moreover the RBA does too. I think it better to keep saying the next move is most likely to be down when the RBA thinks the same than to flip a coin early and ‘get it right first’. Still, my expectation is that we may price out all the cuts before we see the next easing (and that’s the direction interest rate markets went yesterday).
Where the RBA did make changes, they generally showed more confidence that the dynamic they had expected following their prior easing was beginning to play out.
On that note, they bumped their assessment of the housing market up to ‘slowly increasing, with higher dwelling prices and rental yields’, from ‘there are indications of a prospective improvement in dwelling investment, with dwelling prices moving higher, rental yields increasing and building approvals higher than a year ago’.
Similarly, the outlook for non-mining investment was also given a tweak, moving to:
The near-term outlook for non-residential building investment, and investment generally outside the resources sector, is relatively subdued, though recent data suggest some prospect of a modest increase during next financial year
This change is basically the addition of ‘though recent data suggest some prospect of a modest increase during next financial year’, to the end of the prior assessment.
This is where the upgrades stop. They might have done more…
The RBA might have put more weight on the fact that mining capex intentions look a bit better for 2013-14 than they had expected, but they didn’t.
They might also have upgraded their financial market assessment … but they didn’t. Despite the fact that Aussie equities are up 5% since their last meeting. The price action understates the performance of risk assets – they have done well despite the US sequestration, and Italian election ‘risk’.
Finally, the RBA’s own index shows that commodity prices were up firmly in Feb, but they did not upgrade that assessment either. Rather, they left it flat saying that ‘commodity prices are little changed recently, at reasonably high levels’.
On the dovish side, there was a tiny tweak to the inflation assessment – basically noting that the data had confirmed their judgement that a softening labour market was keeping wage costs down.
All in all, the RBA tried very hard to say ‘things are developing as we expected’.
For the first time in a while, there is upgrade potential relative to their outlook, particularly due to the financial market led easing of financial conditions — however, with the mining boom yet to end, i still think the next move (whenever it is) will be a cut … But that might be 2014’s business.