RBA meeting next week – preview – Cash rate to remain unchanged

The Reserve Bank of Australia meet on May 6 and 7. They are almost unanimously (1 of the 37 economists polled expects a hike) expected to leave the cash rate unchanged at 4.35%.

• the statement is due at 2.30 pm Sydney time, which is 0430 GMT and 0030 US Eastern time
• Governor Bullock will hold her press conference an hour later

Reuters polling shows economists forecast just one interest
rate cut this year. The previous survey was tipping two, but sticky inflation data is what has caused the change.

As part of its report, Reuters have a few pertinent comments from analysts.

BlackRock Australasia:

• “Services inflation is still a serious problem that has to
  be dealt with. And the most painless remedy for a central banker
  is higher for longer cash rates”
• “They were late to start hiking, have not hiked as high as
  other major central banks, so expecting them to start cutting
  prematurely was odd from our point of view. If they were to cut,
  and then have to reverse course soon after, it would have
  destroyed their credibility.”

Westpac

• “We expect they (RBA) will remain on hold, but they will
  probably maintain and possibly amp up their rhetoric about the
  risk of a hike. I don’t think the (inflation) surprise we saw in
  March was enough to tip the balance to them hiking, but you
  cannot rule it out completely”

The biggest four local banks, ANZ, CBA, NAB, and Westpac, project no change from the RBA until a 25 basis point cut in November

I did see this earlier this week from Rabobank, looking for hikes later this year:

This article was written by Eamonn Sheridan at www.forexlive.com.