Catching up on this snippet from UBS last week on the RBA.
UBS note the RBA minutes mention the RBA will engage in passive quantitative tightening (QT). QT is when central banks reduce their balance sheets by actively selling assets. 'Passive' QT is allowing holdings of government bonds to roll off the Bank's balance sheet as they mature.
UBS expect the RBA to actively engage selling bonds from the start of next year, provided no particular stress in funding markets emerge.
As for the RBA's cash rate, UBS expect a rate hike at the July meeting. Analysts at the bank argue that the RBA is expecting a 'soft landing' for the economy and will pursue QT over aggressive cash rate hikes to help this scenario.
The next RBA policy meeting is June 4. The July meeting is on the 4th.
