RBA To Consider A Pause But More Tightening Likely

RBA dated OIS pricing firms 3-9bp for meetings beyond July as the RBA Minutes provided further details to the dovish shift by the RBA at the March meeting.

• RBA Board members “…agreed to reconsider the case for a pause at the following meeting” but acknowledged that “core inflation remained too high” and that “further tightening of monetary policy would likely be required to ensure that inflation returns to target”.
• April meeting pricing shows -2bp.
• Interestingly, the market pricing of 45bp of easing by year-end has not been scaled back despite the RBA Board signalling the likelihood of further tightening.

Figure 1: RBA Dated OIS: Pre-Data Vs. Post-Data

Source: MNI – Market News / Bloomberg

Figure 2: RBA Dated OIS: Pre-Data Vs. Post-Data

Source: MNI – Market News / Bloomberg