🏦🇦🇺Cable FX Macro Weekly Note: RBA Cash Rate Decision

**As seen in Risk In The Week report 09/01/23, subscribe at cablefxm.co.uk/reports

The Australian central bank left its policy rate unchanged at 4.1% in late July, less than half of economists surveyed by Bloomberg had expected this outcome. Despite the skipped rate hike, the RBA said that further monetary policy tightening might still be required and that the pause will give the central bank time to assess the impact of hikes. The central bank noted that inflation is easing but it remains too high, they added that future rate hikes will depend on how inflation and the economy evolve. The RBA now sees economic output rising by 1.75% next year and 1.25% this year. Consumer prices are expected to rise by 4.50% in 2023 before slowing to 3.25% next year. On the labour market, the board currently pencils in a jobless rate of 4.50% for 2024, this compares to a current 3.70%. Macro sentiment has been rangebound for a year, the lack of rises in the Aussie CESI means that macroeconomic data fails to sustain upbeat momentum. This is paired with the current slowdown in China which will be filtered into data, we remind you that 30.5% of total Australian trade flowed to China in 2022. The desk at Commerzbank said that the recent uptick in the jobless rate and the slowdown in Monday’s CPI will enforce their current view for the RBA to extend their pause in September. Also, Commerzbank noted that the Chinese slowdown is likely to keep the RBA cautious, they added that if the “higher for longer” theme for the Fed persists, the AUD is unlikely to oppose USD strength.