Rba Little Chance Of A Rate Hike

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Rba Little Chance Of A Rate Hike

Rba Preview: Very Little Chance Of A Rate Hike

The Reserve Bank of Australia's meeting is scheduled for Tuesday where the central bank will look at its monetary policy. Most economists believe that the RBA will keep the rates unchanged as the recent data shows a mild cooldown in inflation.

As of now, the RBA's target for inflation is 2 - 3%, and the actual reading is above this range. That's why the RBA is expected to give hawkish comments, which will revolve around keeping the rates higher for longer.

Australian Benchmark Rate Remains At 4.35%

That's why it is safe to assume that the benchmark cash rate in Australia will remain at 4.35% after the conclusion of the RBA's meeting.

Recent data showed that the Australian PCI increased during Q2, similar to the forecasts of the central bank. Meanwhile, the CPI inflation (monthly) has also eased, which gives little reason for the RBA to make any big moves.

Also, the RBA's governor 'Michele Bullock' is expected to maintain his rhetoric of keeping higher rates for long at the press conference. The governor will also update the central bank's forecast for inflation.

If the RBA gives any hawkish comments, it will boost the Australian stocks which are already down due to the risk-off sentiment.

look at the ASX 200 shows that it has registered steep losses recently after touching highs in the last week. So, any hawkish surprise from the RBA will also help the ASX 200 to recover a little bit. However, higher rates may not be so good for Australian firms as they are struggling with weak overseas demand.

As for the Australian Dollar (AUD), a rebound is highly likely after the RBA's announcement. Overall, weaker inflation and the risk-off sentiment in the market have pushed the AUD/USD lower towards 3-month lows.

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