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.
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Earlier:
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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