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RBA-dated OIS pricing is 1-2bps softer across meetings today ahead of the RBA Policy Decision on Tuesday.
- The market currently assigns a 67% probability to a 25bp rate hike next Tuesday. This percentage had risen to 80% following the release of higher-than-expected Q3 and September CPI data in late October. However, it retreated in the days following RBA Governor Bullock's non-committal comments during her appearance before the Senate Economics Committee.
- The recent moderation in expectations has also been influenced by major central banks opting to maintain their policy rates.
- Expectations for the terminal rate now stand at 4.47%, signifying an increase of 40bps by May 2024. These expectations had peaked at 4.54% in late October, marking the highest level since mid-July.
Figure 1: RBA-Dated OIS Terminal Rate Expectations Versus Cash Rate
Source: MNI – Market News / Bloomberg
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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