Later this afternoon the Reserve Bank of Australia will announce its October monetary policy decision.
Although few, if any, expect rates will move today, there’ll still be plenty of interest on the accompanying monetary policy statement, particularly as this is Philip Lowe’s first meeting as RBA governor.
Here’s the state of play.
- No one expects that rates will be cut today.
- Of 25 economists polled by Bloomberg, all expect the cash rate to remain at 1.50%
- Cash rate futures paint a similar picture with the probability of a 25 basis point rate cut, taking the cash rate to 1.25%, sitting at just 2%.
- Even history is on the side of those favouring a non-move from the RBA. Over the past two decades, the cash rate has moved only four times in October. Most of the rate movements occurred during period of extreme financial market stress associated with the September 11 terrorist attacks, the GFC and European debt crisis.
- Though some expect that there’ll be minimal changes to the accompanying monetary statement, with no rate movement expected, it’ll be the centre of market attention this afternoon.
- In particular, the final paragraph will be closely scrutinised for any hints that a further rate cut could arrive this year, most likely in November.
- In July this year, just four weeks before the ABS released its Q2 CPI report, the final paragraph of the statement said “over the period ahead, further information should allow the Board to refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate”.
- That was interpreted by many to be a conditional easing bias based on the Q2 CPI print, something that was subsequently acted upon when the RBA cut rates to 1.5% in August.
- Many will be interested to see whether similar language will be used today ahead of the Q3 CPI report, released in just four weeks time.
- Outside of the policy bias communicated by the RBA, commentary on the Australian dollar, housing market and domestic economy will also be eyed closely by markets.
The RBA rate decision and monetary policy statement will be released at 2.30pm AEDT.
Business Insider will have full coverage as soon as the decision drops.