RBA Governor Glenn Stevens' communication today had no major market implications. As largely expected, Stevens spoke today on inflation, emphasising the importance of the 2-3% inflation target. He said that the Bank takes a flexible approach to the target and that monetary policy still works.

Stevens noted that the framework followed by the bank had been a successful one since its introduction in the early 1990s. At the same time, he pointed out that the Bank has flexibility around the target. He noted that monetary policy was less powerful, and the impact was taking a little longer to come through, but “by the same token, we should not give up”.

The RBA Governor refrained from directly commenting on the currency, but continued to say that the adjustment that was taking place was entirely appropriate. "We do not see this ‘pass’ as a significant signpost or a hurdle to further AUD weakness." he said.

"Overall, we think that today’s comments suggest that the Bank will continue to respond to inflation, but will not slavishly cut rates in response to further disappointment on the inflation front. With growth looking okay, we continue to look for another 25bp cut at the August meeting with the Bank on hold following that." said ANZ in a report.