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STIR
The RBA is scheduled to announce its policy decision today (0530 BST) with AU STIR attaching an 88% chance of a pause.
- In the March Meeting Minutes, the RBA board agreed to reconsider a policy pause in April, specifically focusing on the releases of employment, inflation, retail trade, and business surveys. The board also emphasised the significance of global economic developments.
- By flagging the possibility of an April policy pause in March, the RBA signalled a potential preference for that outcome, putting the burden of proof on the data to suggest otherwise. With sluggish retail sales and a declining annual inflation rate (CPI monthly), the market believes it is unlikely that the data will present a compelling argument against a pause.
- Furthermore, the RBA's March Meeting occurred before the recent surge in global banking concerns, so the board may also revise its outlook for global growth lower.
Figure 1: RBA-Dated OIS – April & May Meetings
Source: Bloomberg / MNI - Market News
- Although the likelihood of an April hike is not high, the cumulative tightening over April and May meetings is at 11bp, the highest level since 13 March.
- Maybe the market is starting to hedge itself against the possibility of an RBA pause with tightening bias and/or an unfavourable Q1 CPI print on 26 April.
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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