July 23, 2024 05:07 GMT
Australia’s Official Rate Set To Be The Highest In The $-Bloc
STIR
The RBA’s official rate is currently the lowest among the $-bloc central banks at 4.35%, compared to 5.33% for the FOMC, 4.75% for the BoC, and 5.50% for the RBNZ.
- However, the difference between the RBA’s and the BoC’s policy rates is expected to narrow to +15bps this week, if market pricing is accurate.
- The BoC is widely anticipated to cut its policy rate by another 25bps to 4.50% at this week’s meeting, with the markets now pricing in around a 90% chance of a cut, up from less than 50% two weeks ago.
- Moreover, looking ahead to year-end, the OIS market expects the official rate in Canada to fall below that of Australia. If this occurs, it would be the first time since 2018.
- Even more interestingly, when we look 12 months forward using 3-month swap rates 1-year forward (1Y3M), the market now expects the RBA’s official rate to be the highest in the $-bloc for the first time since 2013.
Figure 1: $-Bloc 1Y3M (%)
Source: MNI – Market News / Bloomberg
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