It’s RBA-watch in full this week with the Reserve Bank Board meeting on Tuesday, a speech on household debt and housing from RBA Governor, Phil Lowe on Wednesday then the Quarterly Statement on Monetary Policy on Friday. The RBA seems certain to leave the official cash rate at 1.50% after their traditional monthly board meeting, for the eighth consecutive month this has remained unchanged. The two main concerns for the RBA are firstly the subdued labour market and secondly, risks to financial stability. With these concerns pulling in different directions, analysts continue to expect no change in the cash rate for the remainder of this year.
The RBA this week will likely note the more positive signs on the global economy, however these signs have not led markets to expect faster tightening of monetary policy, which is reflected in current futures pricing (chart below). Any cash rate increase remains a distant possibility, especially given APRA’s recent tightening of investor-lending standards.
Futures Market implied cash rate