If you think that the Reserve Bank of Australia (RBA) is unlikely to move interest rates anytime soon, you’re not alone.
As seen in this chart from TD Securities, financial markets currently hold the view that it’s more likely than not that the cash rate will be left at 1.5% for at least the next 12 months based off current OIS pricing.
There’s a small chance of another cut being delivered by the middle of this year. Longer-term, that view reverses with markets currently pricing in a 40% probability of a rate hike being delivered in February 2018.
Given that view, and having heard so much from the RBA board over the past month, markets aren’t exactly excited by the release of the bank’s March interest rate decision later today.
“(The) RBA meeting should attract passing interest at best,” says Prashant Newnaha, rates strategist at TD Securities.
Economists at ANZ share that view, suggesting that the RBA statement will “likely have little impact” on the Australian dollar and rates markets today.
While that’s not an unreasonable view but any stretch, and common among almost all RBA watchers, it does raise the prospect for the bank to surprise today if they choose to do so.