A snippet preview from National Australia Bank ahead of the July 6 Reserve Bank of Australia policy meeting.
NAB begins by noting media (newswire citing unnamed sources) suggesting the RBA remains sceptical on the outlook for wages. This is despite the jobless rate declining (currently 5.1%).
And warn that the RBA could therefore seek to sound more dovish next Tuesday, in order to push back against the market pricing of a winding back of easing.
- dovish tones could be evident at the July Board Meeting even as the RBA does not roll its 3yr YCC target and as QE is tapered (as is NAB’s view).
- A re-statement of the conditions for a rate hike being not likely until at least 2024 would be one way to push back on market pricing.
- Not tapering QE with a defined program length would be another.
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