Reserve Bank of Australia monetary policy meeting Tuesday 1 August

  • Announcement due at 0430GMT
  • There will be an accompanying statement from the Governor
  • There is no press conference (there never is, just noting this as some people do ask)

In brief - there is no policy change expected from the Reserve Bank of Australia. Focus will turn to the Statement from governor Lowe (more below on this) and then to the SoMP due on Friday (ditto)

ANZ:

  • Unusually, the RBA should be relatively uneventful, given the communications of the past week
  • We will watch the SOMP for clues about how much more confident the RBA has become, but any shifts are unlikely to have policy consequences

Westpac:

  • Will keep rates on hold as clearly signalled by important speeches from both the Governor and Deputy Governor over the last week

On the Statement from Governor Lowe due at the same time as the policy announcement:

  • Governor will continue to "call out" the labour market and the housing markets as the key areas of interest

What to watch for the AUD commentary:

  • It seems likely that the "commentary" on the AUD in the Governor's Statement will be stronger than we have seen recently but we cannot be sure that a new "terminology" will be adopted
  • Even though the move in the AUD is associated with higher commodity prices, the RBA is uncomfortable
  • The higher AUD is a "challenge" for both growth and inflation. In that regard the second RBA report for the week will be more significant.

NAB:

  • Tuesday's RBA Board meeting statement may not throw up too many surprises
  • Friday's Monetary Policy Statement will contain some new insights and refreshed forecasts, though we expect these to be little changed

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Oh and as an added extra ... the importance of reading carefully. I saw a piece from National Australia Bank that began by saying this:

  • The Reserve Bank of India is expected to cut rates by 25bps

Which I of course read (incorrectly) as ...

  • The Reserve Bank of Australia is expected to cut rates by 25bps

Nearly choked on my breakfast I did ...