National Australia Bank expect one more Reserve Bank of Australia rate hike

<p>National Australia Bank on the Reserve Bank of Australia yesterday:</p><ul><li>Yesterday the RBA kept rates on hold at 4.10% as we had expected, but consensus was split going into the meeting with markets pricing just a 24% chance of a hike, while 18/30 economists were tipping a hike. </li><li>Despite that hawkish bias, the extended staff forecasts to end 2025 (from mid-2025) gave a less hawkish feel. Importantly, CPI inflation is forecast to be within 2-3% by late 2025, and relative to the prior May SoMP the end 2024 forecast was unchanged at 3¼%. </li><li>While the Bank maintained a tightening bias, the lack of policy move saw a number of economists (including NAB) shave back their expectations of peak rates from 4.6% to 4.35%. Market pricing shows an 80% chance of one more hike this cycle, with November being the most likely date, following the next quarterly CPI result.</li></ul><p>—</p><p>The Reserve Bank of Australia decision is linked in here:</p><ul><li><a href="https://www.forexlive.com/news/forexlive-european-fx-news-wrap-aussie-knocked-lower-by-rba-yen-fall-extends-20230801/" target="_blank" rel="follow" data-article-link="true">ForexLive European FX news wrap: Aussie knocked lower by RBA, yen fall extends</a></li></ul><p>Reserve Bank of Australia Governor Lowe</p><p>—</p><p>ps., the SoMP is the RBA's Statement on Monetary Policy.</p><ul><li>It outlines the bank's views on domestic and international economic conditions. </li><li>also provides an analysis of the bank's policy decisions and an outlook for inflation and output growth.
</li><li>
It typically includes:
<ul><li>
An overview of the global and domestic economic situation, which incorporates various factors such as growth, inflation, employment, and monetary and fiscal policies of key countries.
</li><li>Information about financial markets, which details changes in asset prices, exchange rates, and monetary policy settings worldwide.</li><li>
Domestic economic conditions, which provides a comprehensive analysis of key indicators including GDP, consumer spending, business investments, the labor market, and housing market.
</li><li>Forecasts for domestic economic activity and inflation, typically for a period of two years ahead. And an assessment of the balance of risks surrounding these forecasts.
</li></ul></li></ul><p>The Statement is released quarterly. The next is due on Friday August 4 at 11.30am Sydney time (0130 GMT 9.30 pm US Eastern time)</p>

This article was written by Eamonn Sheridan at www.forexlive.com.