RBA policy enters testing period - BAML

Analysts at BAML out with their expectations from Tuesday’s RBA monetary policy announcement.

Key Quotes:

“The RBA could send a stronger signal that the next move in rates is up if housing remains resilient and rates rise elsewhere

A shift in bias would prompt us to review our curve views. Political risks are rising, but this should remain a distraction.

FX valuation is unlikely to be a concern yet suggesting the AUD should remain supported in the absence of a slowdown in China

Policy enters testing period

In our view, the Reserve Bank of Australia (RBA) is set to keep policy on hold when the board meets next week. This will extend the period of unchanged rates at record lows beyond a year. However, the policy discussion should get more interesting now that the forecast round is out of the way and the next Parliamentary testimony is six months away.”