AUD & ACGBs Look Through Bullock’s Comments

YM & XM are essentially unchanged on comments from RBA Governor Bullock, as she failed to meaningfully move the needle.

• AUD/USD also looked through the headlines, essentially printing unchanged vs. pre-release levels.
• A quick reminder that the minutes from the RBA’s most recent policy meeting had already provided a hawkish surprise for markets, noting that “the Board has a low tolerance for a slower return of inflation to target than currently expected.”
• At the close of OIS trade (a few hours ahead of the release) the market was pricing ~25.5bp of further tightening in the current cycle i.e. a 25bp rate hike was fully priced. Terminal policy rate pricing remains a little shy of last week’s highs.
• Today’s address saw Bullock stress that “the Board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation.” Note this was caveated with “at the same time, the Board is mindful that growth in demand and the rate of inflation have been moderating, and that there are long lags in the transmission of monetary policy.”
• She also highlighted that “there may sometimes be a need to balance the various objectives and this requires careful judgement. It is incumbent upon the Board to be transparent about when and how it is doing this.”