MNI RBA Preview - June 2023:  Close Call, Not “If” But “When”

EXECUTIVE SUMMARY:

• The RBA remains very data dependent and the more moderate data over the last month gives it the opportunity to “watch and wait” and assess another month’s data including Q1 national accounts (due June 7). Given this and that the central bank says that policy is restrictive and working, we expect rates to be held at 3.85% in June, but the meeting is “live” and around a third of analysts expect a 25bp hike and the market is sitting on the fence.
• The meeting outcome should be very close with both a pause and +25bp being discussed in depth. The tightening bias is likely to be retained either way. Importantly, a pause won’t mean the tightening cycle is over. it is not a matter of “if” they hike further but “when”.
• The June, July and August meetings are all "live" with a particularly high probability of a rate hike on August 1 following the Q2 CPI data, which will include the latest reading on services inflation. The impact of the minimum-award wage increase announced on Friday won't be seen in the data until the Q3 WPI released in November.

See full preview here:

RBA Preview - June 2023.pdf