Market pricing surrounding the RBA terminal rate has shifted higher again in recent weeks’ although the June peak of ~4.50% has not been breached. While domestic economic resilience and RBA worry re: inflation is part of the story, the shift higher in terminal rate pricing surrounding the U.S. Federal Reserve, coupled with the universal support for the “higher for longer” thought process within the Fed, as well as the recent BoE terminal rate repricing, primarily driven by UK fiscal matters, have played just as much, if not more, of a part. This adds credence to our assumption that the RBA will not be willing to step down the pace of tightening at its October meeting.
Fig.1: The Recent Evolution Of RBA Dated OIS Pricing
Source: MNI - Market News/Bloomberg