Economists and traders expect the Reserve Bank of Australia to keep the cash
rate at 4.35% at Tuesday’s meeting — a second consecutive hold — while
reiterating readiness to tighten further to combat persistent inflation. Markets
will focus on the policy statement and updated quarterly forecasts for signals
on whether the RBA has finished hiking after 75bp of moves this year or intends
further tightening. Carl Ang, fixed income research at MFS Investment
Management, says a hawkish pause is the base case but slow disinflation means
additional tightening cannot be ruled out. Economists broadly expect an extended
pause through the remainder of this year and most of next; Commonwealth Bank’s
Belinda Allen expects the RBA to bring forward the forecast for inflation
falling below 3% and to lift its unemployment projection.
