Markets still think the next move in Australian interest rates will be higher, but it will arrive later

Courtesy of TD Securities, this chart shows the current implied probability of a 25 basis point rate move from the Reserve Bank of Australia (RBA) over the next 12 months using overnight index swaps (OIS) pricing.

Source: TD Securities

Markets continue to favour that the next move from the RBA will be higher, although the expected timing of a rate increase has been pushed back recently following soft inflation and retail sales data in Australia.

Earlier this year OIS markets were close to fully priced for two 25 basis point rate increases to be delivered in 2018. Now it’s seen as an even money bet that one rate increase will be delivered within the next 12 months.

The RBA will announce its November interest rate decision at 2.30pm AEDT today.

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