RBA Said To Be Mulling Tighter Guidance For July Meet

The Reserve Bank of Australia is beginning to wonder whether it should signal a higher probability of a rates increase by the end of 2024 at its July meeting, even as it considers a near-term extension of its bond-purchasing programme in the face of continuing weak inflation and wages data, MNI understands.

• While the RBA is determined to see the whites of inflation's eyes for an extended period before any tightening, as wages growth, currently at a sluggish 1.25%, picks up and capacity tightens, it has upgraded growth forecasts and subtly changed its language on rates to match. Whereas it previously said that it did not expect conditions for an interest rate rise "to be met until 2024 at the earliest," in May the bank said that these conditions are "unlikely" to be met by then.
• Further adjustments to the language could come in July, when the central bank will also decide on whether to extend its yield control target of 0.10% to three-year bonds government maturing in November 2024, from current guidance targeting the April 2024 series. The yield target matches the 0.10% historic low for official interest rates, the level since November 2020.