National Australia Bank on the Reserve Bank of Australia yesterday:
- Yesterday the RBA kept rates on hold at 4.10% as we had expected, but consensus was split going into the meeting with markets pricing just a 24% chance of a hike, while 18/30 economists were tipping a hike.
- Despite that hawkish bias, the extended staff forecasts to end 2025 (from mid-2025) gave a less hawkish feel. Importantly, CPI inflation is forecast to be within 2-3% by late 2025, and relative to the prior May SoMP the end 2024 forecast was unchanged at 3¼%.
- While the Bank maintained a tightening bias, the lack of policy move saw a number of economists (including NAB) shave back their expectations of peak rates from 4.6% to 4.35%. Market pricing shows an 80% chance of one more hike this cycle, with November being the most likely date, following the next quarterly CPI result.
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The Reserve Bank of Australia decision is linked in here:
Reserve Bank of Australia Governor Lowe
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ps., the SoMP is the RBA's Statement on Monetary Policy.
- It outlines the bank's views on domestic and international economic conditions.
- also provides an analysis of the bank's policy decisions and an outlook for inflation and output growth.
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It typically includes:
- An overview of the global and domestic economic situation, which incorporates various factors such as growth, inflation, employment, and monetary and fiscal policies of key countries.
- Information about financial markets, which details changes in asset prices, exchange rates, and monetary policy settings worldwide.
- Domestic economic conditions, which provides a comprehensive analysis of key indicators including GDP, consumer spending, business investments, the labor market, and housing market.
- Forecasts for domestic economic activity and inflation, typically for a period of two years ahead. And an assessment of the balance of risks surrounding these forecasts.
The Statement is released quarterly. The next is due on Friday August 4 at 11.30am Sydney time (0130 GMT 9.30 pm US Eastern time)
