BAML has 'greater confidence' in a shift at the RBA

BAML on the RBA

Bank of America Merrill Lynch Research discusses its RBA call and thinks that the RBA should express greater confidence in the outlook when communication resumes next month.

"Recent data has been strong. It might be too early to expect a clear tightening bias, but it is a matter of time in our view. This is not yet priced in," BofAML argues.

In line with this view, BofAML thinks that a key signal for this potential RBA policy shift should come via a strong 4Q CPI print on 31 January (BofAML looks for a 0.8% rise) which should see RBA pricing rise even further.

"Another rise in the 1Q CPI data at the end of April would make the May meeting live. Concerns over the currency might temper the RBA's tone, but the broad value of the AUD is still in line with RBA forecasts," BofAML adds.

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