While most attention today will be on the running of the Melbourne Cup, there is an event that traders will have to navigate before the horses jump: The Reserve Bank of Australia’s (RBA) November interest rate decision.
Prashant Newnaha, Interest Rates Strategist at TD Securities, has some good news for traders — it’s unlikely to deliver any significant surprises, allowing plenty of time for those looking to place last minute bets on the Cup.
This flowchart shows what Newnaha is expecting.
He ascribes a 99.9% chance that the cash rate will be left at 1.50%, mirroring similar sentiment from traders and economists.
As for the accompanying monetary policy statement, he says there’s a 85% probability that the RBA will deliver a neutral tone, maintaining the status quo seen throughout 2017.
“We expect the Bank to reaffirm a neutral monetary policy bias again and for the Bank to shy away from introducing any major changes to the statement,” he says.
“For now the Bank is likely to reaffirm an optimistic outlook on the domestic economy, pointing to positive jobs prints and forward looking employment indicators and reiterate the Bank’s positive global economic outlook.
“However high levels of household debt and macro-prudential impacts will bear watching,” he says.
Given today’s meeting comes just days before the RBA will release updated forecasts for inflation, GDP growth and unemployment, it may, if recent history is anything to go by, flag any potential changes in the accompanying policy statement.
The rate decision will be released at 2.30pm AEDT, 30 minutes before the Cup gets underway in Flemington.