RBA kept rates on hold - TDS

Research Team at TDS, notes that the RBA kept rates on hold as expected but all eyes were on comments regarding the currency.

Key Quotes

“The last time the RBA jawboned the AUD was in July when the Bank stated “Further depreciation seems both likely and necessary“), but today the Bank said “...an appreciating exchange rate could complicate the adjustment under way in the economy”. It is debatable whether this new addition is dovish but the RBA refrained from categorically jawboning the AUD lower and there is nothing in today’s statement to suggest a May cut is imminent. The RBA dropped reference to market turbulence but it appears that Fed Chair Yellen remains concerned. It’s back to watching the data, Employment on 14th April and CPI on the 27th.

The head of APRA spoke at the AFR’s Banking & Wealth Summit, in essence stating that further improvements in capital and funding were required. He said that 2016 would be the year for finalisation of the rules, 2017 would be about consultation and 2018 would be when the new rules are implemented.

One area where APRA would be seeking guidance from other jurisdictions is on designing new forms of capital that can be ‘bailed in’ to absorb losses, and reducing the likelihood of tax payers contributing to the bail out. Another area APRA was looking to address was the heavy reliance by banks on foreign short term financing and to look at options in building domestic wholesale capacity.

Bill Coen (the secretary general of the Basel Committee on Banking Supervision) also spoke and he said the committee's top priority would be to set minimum standards of capital by the end of 2016, involving scaling back the importance of internal models to set capital levels.”