The Reserve Bank of Australia (RBA) Board meets this Tuesday and, for the first time since 2005, the November RBA Board meeting will not be "live". That is, there is no market speculation about any likely move in rates. As such, I am confident that rates will remain on hold following the meeting this month.
RBA Governor Glenn Stevens’ comments last week reminded us that the Board still favours a lower Australian Dollar (AUD) to help rebalance the Australian economy and hence an easing bias remains, albeit only a 45% probability of a rate cut by June next year and a similar 45% probability of a rate hike by December next year.
Of course we will be interested in the Governor's accompanying statement particularly around housing, business and consumer confidence, and the exchange rate. At the time of the last Board meeting the Australian Dollar was trading at USD0.94; since the meeting it has touched a four-month high of USD0.9758, but has recently moved back to around USD0.94. Mr Stevens is likely to repeat his comment that "a lower level of the currency than seen at present would assist in rebalancing growth in the economy".
This recent strength in the AUD has reduced the amount of rate hikes the futures market has priced in for the longer term.
As a piece of trivia, last year there was reasonable expectation that the RBA would cut in November, but in fact it was delayed until December. A year earlier, in 2011, rates were cut by 0.25% in November and in November in both 2010 and 2009 rates were increased by 0.25%. Further back, November 2008 the RBA delivered a 0.75% rate cut and raised rates by 0.25% in 2007 and 2006.