Imagine if the Reserve Bank of Australia actually looked like this. Unfortunately, the famous signage area has been turned into a bus station and covered with scaffolding. Oh. Anyway, the RBA will announce its latest policy decisions later. But barring any major surprises, this won’t be a big deal.
Inflation remains stubbornly high, and that is the main problem for the RBA. They are not in a comfortable position to cut interest rates, and in fact they warned of the potential risks of higher inflation in their August statement here.
The language in the statement is expected to remain largely unchanged. The headline statement is sure to be a line that the central bank “does not rule out or preclude any further policy action.” It is also sure to say that “policy will need to be sufficiently restrictive until confidence returns that inflation is moving sustainably toward the target range.”
Traders are pricing in a 99% chance of no change in cash rates today. But given the final decision is due in December of this year, traders are forecasting a 16 basis point cut by then. Looking ahead to May of next year, traders are currently pricing in a 73 basis point cut in total.