- Markets and economists unilaterally agree the RBA will keep its cash rate unchanged for a record 25th consecutive month in September.
- TD Securities doesn’t expect any major surprises in the statement, ascribing a 95% probability that its tone will be neutral.
- Markets are only 30% priced for a 25 basis point increase in the cash rate by the end of 2019.
TD Securities expects the Reserve Bank of Australia’s (RBA) September monetary policy meeting will be another non-event, ascribing a 95% chance the bank will maintain a neutral bias on the outlook for official interest rates.
“TD and unanimous consensus expect the RBA to pause at 1.5% tomorrow, continuing the record-breaking no-action run,” says Annette Beacher, Chief Asia-Pacific Macro Strategist at TD.
“The RBA saturated the airwaves last month with monthly, quarterly and semi-annual updates but remained on message, reinforcing that stability is the RBA’s number one role in these turbulent times.”
This table from TD shows the probability of what the RBA may do at today’s meeting, as well as the rationale for the call and the expected market reaction.
Beacher expects that changes to the post-meeting statement will be minimal.
“We doubt the policy statement will mention Westpac’s 14 basis point out-of-cycle-mortgage hike but could remove the reference to mortgage rates being lower than a year ago,” she says.
“It could note that the Australian dollar is at the bottom of its recent two-year range.”
Based on current pricing, markets are only 30% priced for a 25 basis point rate hike from the RBA by the end of next year.
Traders, like an increasing number of economists, are clearly of the view that official rates will be left unchanged for the foreseeable future.
The RBA policy statement, including the cash rate decision, will be released at 2.30pm AEST.
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