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MNI RBA WATCH: Board To Hold, But Mull Shift From Neutral

(MNI) Melbourne

The RBA board will seek to juggle high inflation with a raft of weaker data points when it meets next week.

The Reserve Bank of Australia board looks set to hold the cash rate at 4.35% when it meets over May 6-7, with policymakers considering a shift to a more hawkish tone as they evaluate still elevated inflation and a resilient labour market alongside several softer metrics across the economy.

The market will also eye publication of the Reserve’s updated forecasts within May’s Statement of Monetary Policy, which could push out the RBA’s timeline for returning inflation back to the 2-3% target and also increase its end of year cash rate assumption. The RBA had predicted inflation back to target by late 2025, and assumed a 3.9% cash rate by December.

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The Reserve Bank of Australia board looks set to hold the cash rate at 4.35% when it meets over May 6-7, with policymakers considering a shift to a more hawkish tone as they evaluate still elevated inflation and a resilient labour market alongside several softer metrics across the economy.

The market will also eye publication of the Reserve’s updated forecasts within May’s Statement of Monetary Policy, which could push out the RBA’s timeline for returning inflation back to the 2-3% target and also increase its end of year cash rate assumption. The RBA had predicted inflation back to target by late 2025, and assumed a 3.9% cash rate by December.

Keep reading...Show less