Technical Analysis

RBA monetary policy decision is due today – preview

The Reserve Bank of Australia statement is due at 0330 GMT on Tuesday, 6 December 2022.

Earlier previews:

As an aside, I have read some outdated ‘previews’ of this RBA meeting. For example, the RBA is ‘data dependent’. They are not. They were but this has been abandoned as the bank watches and waits while it assesses the impact of its past rate hikes. Westpac also added, pointedly:

  • The Minutes of the November meeting revealed a new guideline for monetary policy, “acting consistently would support confidence in the monetary policy framework.”
  • The motive of “consistency” does seem to be at cross purposes with the core policy of “[t]he size and timing of future interest rate increases will continue to be determined by the incoming data.”

Spot on.

Anyway, some snippet previews:

Société Générale

  • “We expect the RBA to increase its cash rate target from 2.85% to 3.10%. While policymakers continue to say that they have not ruled out returning to 50 bps hike if necessary, we don’t think that the current environment justifies returning to a 50 bps hike. We reiterate our recently revised terminal policy rate forecast of 3.85%, which matches our forecast of the terminal Fed Funds rate at 5.25% (upper bound).”

National Australia Bank:

  • The RBA is widely expected to hike rates by 25bp …
  • The RBA may be contemplating a pause soon, but it is still too early and it is worth noting that a 50bp hike was considered in November due to the “current inflation environment and the upside risks to inflation from the labour market, rents and energy costs. ” Data since then only underscores those risks with wages growth accelerating more than expected in the WPI and the unemployment rate falling back to 3.4%.
  • As for the post-Meeting Statement, this could read a little softer and open the door more explicitly to a pause sometime in early 2023. The November Minutes and Governor Lowe’s latest speech included language that “the Board is prepared to keep rates unchanged for a period while it assesses the state of the economy ” and although so far balanced against the possibility of moving back to 50bp increments, similar language will likely be reflected in the post-Meeting Statement.

This is the final RBA meeting for this year.

The next meeting is on February 7.

The Reserve Bank of Australia does not meet in January, its beach holiday time! I hope they find a better beach than this one, it sucks:

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