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.
---
Earlier:
---
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
RBA
