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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
RBA
In the minutes from the March meeting, the RBA said that it would discuss a pause on April 4 as policy is now restrictive and there has a been a lot of tightening since May. It is likely to be a difficult meeting given that so far the economics point to further hikes but recent overseas banking collapses will also be factored into the decision, although Australia’s banks are in a solid position.
- Our policy reaction function, which estimates the cash rate using the inflation and output gaps, indicates that based on these variables rates have further to go, including if house prices are considered.
- Our policy reaction function is signalling a further 50bp of tightening over the next 6 months, down from 100bp in February, and doesn’t suggest a cut over the time horizon. However, when house prices are included, around 35bp is implied with a terminal rate around 4.1% in Q4 and the first cut in Q1 2024.
- The results of both of these equations are well above AUD OIS market pricing, which took out any further rate hikes following the collapse of SVB and is implying RBA cuts from June 2023.
RBA cash rate estimations %
Source: MNI - Market News/Refinitiv/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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