J.P. Morgan See The RBA On Hold Today, But See A November Hike

The US bank sees the RBA on hold today, but expects another hike in November.

• J.P. Morgan: "The RBA board has been on hold over the last three meetings, showing a balanced approach to its achievement of the inflation target after the ‘risk management’ hikes in May and June. We have viewed the balanced approach as reasonable, but still see scope for one more hike. Given that the guidance has seemingly pinned the decision framework to the SoMP forecast review process, we expect that hike to come in November. The case to hike again is a relatively balanced one and it is reasonable to wait for the full collection of data to make the call; in our view upward revisions to the GDP forecast in particular will be the clincher, after the 2Q report surprised vs staff projections.
  
  For next week’s meeting, we expect the board to leave the cash rate steady and don’t anticipate much change to the guidance, which is already set to be consistent with a forecast-driven hike in future meetings, if required: “some further tightening of monetary policy may be required” and from the minutes “…should inflation prove more persistent than expected”.
  
  The August CPI data present some flavour of this with the %oya rate moving back up again. But we see the case for a November hike as more likely to be pinned on growth and by implication, labour market resilience, risking delay of the return to target in the forecasts. Other topics of significance are likely to be housing, after the surprising upturn, and offshore developments, given higher for longer global rates (hawkish) and China’s medium-term concerns (dovish)."