This will be the third rate cut delivered by the RBA this year, unless they are going to do the unexpected today. But in all likelihood, they should announce another 25 bps rate cut in taking the cash rate to 3.60%. As things stand, markets are pricing in ~92% odds of that happening. So, therein lies the balance of risks to any reaction for the Australian dollar.
Looking further out to year-end, traders are pricing in ~74 bps of rate cuts in total. And that's roughly three more rate cuts, including the one today.
Going back to the RBA decision, just be wary that not all economists are of the view that a rate cut today is a given. There is a small number of outliers with Citi and BofA the two notable names in that camp.
But with the central bank expected to deliver a rate cut, the statement language is not likely to differ all too much from May. A couple of key wordings to be mindful of:
Maintaining low and stable inflation is the priorityThe risks to inflation have become more balancedInflation is in the target band and upside risks appear to have diminishedWill be attentive to the data and the evolving assessment of risks to guide decisionsFocused on mandate to deliver price stability, full employment and will do what is necessary to achieve thatWe'll have to see which parts they'll be keeping, if not all of them this time around.
This article was written by Justin Low at www.forexlive.com.Hence then, the article about heads up rba monetary policy decision coming up later at 0430 gmt was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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