Bank of America Global Research discusses its expectations for Tuesday's RBA policy decision with the market pricing in an 82% of a 25 bps hike and the remainder at no change.
"The Reserve Bank of Australia (RBA) meets this Tuesday, 7 March. We see a high probability of another 25bp hike, taking the cash rate to 3.6%. With 25bp also largely expected by consensus, the focus will be on whether the RBA softens its policy guidance that "it expects that further increases in interest rates will be needed over the months ahead" in a less hawkish direction, given the recent string of weak data," BofA notes.
"However, having tilted dovish previously only to be caught off guard by hawkish 4Q CPI report, we think the RBA might keep guidance unchanged this time, waiting for more data to confirm the slowdown in employment, spending, and inflation," BofA adds.
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