Background Talk Of Chances Of 65bp Rate Hike Seems Misplaced

We have picked up on some discussions/market chatter surrounding the potential for a 65bp hike from the RBA later today. We would attribute this to a TD Securities piece which noted that “all analysts (including us) expect the RBA to hike the target cash rate by 50bp bar one (75bp). The RBA surprised the market in May and June, so the possibility of a 65bp hike cannot be ruled out.” This clearly flags that their base case is a 50bp hike, with the 65bp step seen as a low probability outcome. Indeed, TD went on to note that “the Bank has displayed very little appetite to hike in order to return the cash rate to round levels. A 65bp hike could be warranted given broadening inflation pressures, but why not hike 75bp if this is the case?” Note that a 75bp August hike was TD’s baseline call prior to the Q2 CPI data. TD note that a 50bp move is “would be consistent with the RBA's measured approach and in line with the RBA's prior two hikes.”