Door slammed shut on further RBA easing? Hardly. While the RBA will be pleased with the recent depreciation in the AUD, something that they've sighted on numerous occasions to assist economic rebalancing, their inaction in 2014 may come back to haunt them come 6am tomorrow morning. Should the US FOMC lay the groundwork for a slower and shallower tightening schedule the first beneficiary of such a decision will be the high-yielding, AAA-rated Australian Dollar. (VIEW LINK)
History suggests they will. Still, the RBA's own AUD trade-weighted index fell only 3% in 2014 - it's not all about the USD, particularly when the vast majority of our international trade is centred in Asia. As for lower fuel costs remember that in December US retail volumes fell 0.9% despite consumer confidence soaring. Hardly a reliable correlation, at least in the short-term.
Surely the RBA will take a wait and see position so they can assess any impacts of lower currency and oil... I was strongly in the camp for a move lower but the moves in currency and oil have been significant and I suspect enough to hold rates for now