BUZZ-COMMENT-RBA's August meeting likely to be a low-key event

Credit: REUTERS/JASON REED

The Reserve Bank of Australia is widely expected to hold its cash rate at 0.25% on Tuesday. The accompanying statement may not be materially different from July despite a resurgence in coronavirus cases, as the central bank is likely to provide further details in its quarterly Statement on Monetary Policy, due on Friday.

Aug 3 (Reuters) - The Reserve Bank of Australia is widely expected to hold its cash rate at 0.25% on Tuesday. The accompanying statement may not be materially different from July despite a resurgence in coronavirus cases, as the central bank is likely to provide further details in its quarterly Statement on Monetary Policy, due on Friday.

The RBA had sounded a bit more upbeat regarding the impact of the coronavirus on the Australian economy in July's statement, noting "Conditions have, however, stabilised recently and the downturn has been less severe than earlier expected." However, the subsequent surge in coronavirus cases in Victoria and lockdown in Melbourne will negatively impact Australia's economic outlook .

The RBA will have to address the developments in Victoria, but is unlikely to suggest they will alter the policy outlook in the foreseeable future. The RBA has repeatedly shown an aversion to negative rates and may instead emphasize the highly uncertain outlook, as in previous statements.

The central bank is not expected to mention the level of the Australian dollar, but may use the statement to flag some of the economic forecasts that will be released in Friday's Statement on Monetary Policy.

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(John Noonan is a Reuters market analyst. The views expressed are his own)

((john.noonan@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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