RBA Preview: Expect no change to rates on Tuesday - HSBC

Analysts at HSBC provide a sneak peek at what to expect from next Tuesday’s RBA monetary policy decision.

Key Quotes:

“Underlying inflation remains below the RBA's 2-3% target band but is clearly past its trough

At the same time, the labor market is tightening up which is expected to lift wages growth and inflation in coming quarters

Fixed income strategy: this meeting is unlikely to be the catalyst for RBA policy to be re-priced, favor the long-end

We expect the RBA to leave its forecasts for growth and inflation largely unchanged from those published in August. The RBA's last set of published forecasts, in the August official statement, showed GDP growth forecasts to be 2-3% over 2017 and 2.75-3.75% over 2018. The RBA's inflation forecasts showed underlying inflation forecast to run at 1.5-2.5% over both 2017 and 2018. Since the last statement, the AUD has fallen modestly (-4%) and oil prices have climbed(+15%), which may put some upward pressure on the RBA's headline CPI forecasts.”