Reserve Bank of Australia (RBA) chose to keep the interest rate steady at 1.5 percent.

Let’s look at the details of policy announcement to assess the bias of RBA.

Key highlights:

• RBA notes that the global economic conditions have continued to improve. Business and consumer confidence have picked up. Above trend growth expected in a number of advanced economies. China’s growth supported by spending in infrastructures and property construction. Increased borrowing in China with growth composition pose medium-term risks. This improvement is pushing commodity prices higher, thus boosting Australia’s national income.(Neutral bias)
• The Australian economy is continuing its transition from the post-mining boom. Grew 2.5 percent in 2016. Exports are up strongly. Most measures of business and consumer confidence at or above average. Consumption growth strong but household income weak.(Mild hawkish bias)
• Low-interest rates supporting economy and banks are in a position to lend for worthwhile purposes. Warns against stronger Aussie.(Neutral bias)
• Labour market and improvement continues. The labor market is giving mixed signals but employment expansion likely. There are considerable variations in employment across the country. (Neutral bias)
• Inflation is quite low and likely to remain so, however likely to pick up over the course of 2017. Likely to reach above 2 percent but rise likely to be gradual. (Neutral bias)
• RBA seems to be less worried of the risks from rising house prices and considered supervisory measures effective. Acknowledges variation in prices across the country. It, however, acknowledges both decline and rise in prices in different areas but confident over upcoming supply. (Neutral Bias)
• Growth in rents slowest in some decades. (Neutral bias)

There have been considerable changes in the monetary policy statement; the amounts of information given out from the policy statement were reduced, which is basically cutting the size, compared to the previous statement. It is also less hawkish though the overall bias remains hawkish.

The Australian dollar has gained lots of grounds in recent days and we expect the currency to rise further.  The Aussie is currently trading at 0.762 against the dollar.