RBA’s December decision: cash rate likely to hold, questions arise for future increases

In brief from a Westpac preview of the upcoming RBA decision.

Westpac is forecasting that the Reserve Bank of Australia is unlikely to raise the
cash rate at its December meeting.

  • As described in the minutes of the November meeting, the staff
    forecasts were “predicated on there being an additional one to two
    increases in the cash rate over coming quarters”. The peak in rates
    assumed in the forecasts is “around 4½ per cent” according to the
    RBA’s latest Statement on Monetary Policy (SMP).
  • One of these
    increases was already delivered following the November meeting.
    The question the RBA will be grappling with in coming months is
    what they need to see to turn one-and-a-half into two.

WPAC highlight the February meeting:

  • By the time of the February meeting, the RBA will have the full
    December quarter inflation data as well as the September quarter
    national accounts and other key data. We reaffirm our view that
    the RBA Board would raise the cash rate at that meeting if it sees
    further upside surprises to inflation or fresh evidence suggesting
    that inflation will decline more slowly than it intends. If things
    play out broadly in line with their forecasts, though, further moves
    would be harder to justify. In that case, it would be likely that the
    RBA would hold the cash rate steady. Currently we believe this is
    the more likely outcome.


The Reserve Bank of Australia meet tomorrow, the statement is due at 2.30pm Sydney time on Tuesday, 5 December:

  • 0330 GMT and 2230 US Eastern time on Monday, 4 December 2023

This article was written by Eamonn Sheridan at www.forexlive.com. Source