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STIR: RBA Dated OIS Pricing Firmer Than Pre-Q4 CPI Levels Beyond February

STIR
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RBA-dated OIS pricing is flat to 4bps firmer across 2025 meetings today, led by late-2025 contracts, following yesterday’s hotter-than-expected US CPI data.

  • Headline and core CPI inflation exceeded market expectations by 1-2bps, with the services component (excluding housing and energy)—a key Fed measure of domestic inflationary pressure—rising sharply by 0.8% m/m.
  • OIS pricing is now firmer compared to pre-Q4 CPI levels on 24 January, with the Aug-25 meeting up 14bps over the past week.
  • A 25bp rate cut in April remains fully priced (113%), while the probability of a February cut stands at 82%, based on an effective cash rate of 4.34%.
  • Historically, it would be highly unusual for the RBA to diverge from market expectations, particularly given its lack of any official or unofficial pushback—a stance it has actively taken in the past.

 

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RBA-dated OIS pricing is flat to 4bps firmer across 2025 meetings today, led by late-2025 contracts, following yesterday’s hotter-than-expected US CPI data.

  • Headline and core CPI inflation exceeded market expectations by 1-2bps, with the services component (excluding housing and energy)—a key Fed measure of domestic inflationary pressure—rising sharply by 0.8% m/m.
  • OIS pricing is now firmer compared to pre-Q4 CPI levels on 24 January, with the Aug-25 meeting up 14bps over the past week.
  • A 25bp rate cut in April remains fully priced (113%), while the probability of a February cut stands at 82%, based on an effective cash rate of 4.34%.
  • Historically, it would be highly unusual for the RBA to diverge from market expectations, particularly given its lack of any official or unofficial pushback—a stance it has actively taken in the past.

 

Keep reading...Show less