Previews of the Reserve Bank of Australia monetary policy announcement and statement due at 0430GMT
In a nutshell, no change to the cash rate and eyes on the statement.
And, a heads up, RBA Governor Lowe will be speaking later in the Australian day (evening actually), that's due at 0910GMT.
ANZ:
- We will be looking to see whether the shift to a more hawkish stance continues.
- The RBA Governor may elaborate on the Bank's outlook when he speaks at the RBA Board dinner that evening.
- We think we are currently in the midst of a partial regime shift by the Bank. Concerns around household debt, financial resilience and stability seem to be gaining much greater focus in its assessment. While this has been going on from some time, these concepts are relatively new.
CBA:
- The RBA is expected to leave the cash rate unchanged on Tuesday.
- Low inflation & weak wages growth give the RBA plenty of time. Modest jobs growth puts (slight) downward pressure the national unemployment rate. But wages are not expected to fuel inflation anytime soon.
NAB:
- The RBA is expected to leave the cash rate on hold again, but to recognise that the near term growth momentum of the economy continues to improve.
Westpac:
- The RBA is certain to leave rates unchanged again at its September meeting. The Bank has left the cash rate unchanged since August last year.
- Over the past year, economic growth has been patchy, core inflation is below the target band, there is significant slack in the labour market and wages growth is at historic lows. With a number of these trends likely to persist, we expect rates to remain on hold throughout 2017 and 2018.
- However, market pricing is for one rate hike by the second half of 2018. The 2018 outlook is critical to the rates debate. The RBA's central case forecast is for growth to accelerate to be above trend in 2018 and into 2019. We are less convinced, expecting growth to slow to below trend in 2018.
Bonus item ... the view from HSBC, who are slightly more upbeat than those 4 views above:
- We expect the RBA to remain on hold for now.
- We believe that above-trend growth over the rest of the year and continued improvement in the labour market will lead to a modest lift in inflation and wage growth. We see this paving the way for an RBA rate hike in early 2018.
- Notably, this month, RBA Governor Phil Lowe stated that it is reasonable to assume that the 'next rate move will be up rather than down', but that it is 'some time away if things play out as [he] expects'.
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For the Australian dollar, unless there is a surprise or shock in the statement movement in response to an as expected RBA decision & statement today should be muted.
