Westpac: Could A 15bp RBA Rate Hike Disappoint? Unlikely.

Westpac note that “a 15bp RBA rate hike later today is now fully factored-in which implies there is some scope for shorts to be covered on the delivery of that outcome. However, we would not be adopting longs at the beginning on the tightening cycle, despite the magnitude of hikes already factored-in. The market will be very focused on the RBA’s tone and forecasts in Friday’s SoMP for clues as to the RBA’s preferred policy track. The real surprise following the Board meeting would be if the RBA were to either do nothing or begin with an even larger hike. We think the former is less likely than the latter, so, despite last week’s large shift higher in yields across the term structure, that still skews risk rewards ahead of the RBA outcome toward bearish outcomes.”