RBA recap – On hold, neutral bias, full optionality over the future path of the cash rate

As was widely expected, the Reserve Bank of Australia left the cash rate unchanged yesterday:

• RBA leaves cash rate unchanged at 4.35%, as expected
• RBA’s Bullock: We did not consider the case for a rate cut today
• RBA’s Bullock: We need a lot to go our way to bring inflation back to range

I posted earlier from WPAC:

• RBA recap – more alert to upside inflation risks, less confident inflation is moderating

Commonwealth Bank of Australia have a slightly different take, but also see the potential for a further rate hike from the Bank::

• The Board maintained its neutral stance, as we and most analysts anticipated.
• The Board retains full optionality over the future path of the cash rate and has once again stated, “the path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out”.
• The August Board meeting is potentially ‘live’ based on where the Q2 24 trimmed mean CPI lands –our forecast for the June quarter trimmed mean CPI is 0.8-0.9%/qtr, which would see the RBA leave policy unchanged.
• The RBA Board does not want to lift the cash rate again. But a Q2 24 trimmed mean CPI north of 1.0%/qtr would test the Board’s resolve not to tighten policy further.
• Our base case sees the RBA on hold until November 2024 where we have pencilled in the start of an easing cycle.

CBA mention the Q3 CPI. This data is due on July 31 (11.30 am Sydney time, which 0130 GMT and 2130 US Eastern time on the 30th).

—

The meetings ahead out until the end of next year:

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