📝 RBA May Monetary Policy Meeting Preview

**As seen in Cable FX Macro's Risk In The Week report 04/29/2022, cablefxm.co.uk/reports

The RBA’s last meeting saw the central bank leaving its Cash Rate Unchanged at 0.10%, as expected. The bank stated that the economy remains resilient as household spending picked up, and further increases were expected. On inflation, the bank noted the tick higher, but it also said prices remain lower than in other countries. Labour costs were said to remain in line with the CPI target and these would be monitored in the coming months to set policy, the central bank said. The RBA’s base case sees the unemployment rate falling below 4% in 2023. Also, the bank dropped its rate hike “patience” reference in the monetary policy statement, this was taken as a hawkish signal and caused some desks to revise the RBA’s first rate hike move. Traders pushed implied policy rate expectations higher to 2.41% in the next 12 months from a 2.22% before the meeting. As of time of writing, the futures implied rate sees the Cash Rate at 0.53% for the June 2022 contract and at 2.50% for the December 2022 contract. Economists at Westpac now see a 15bps hike from the RBA next week given the latest inflation figures. Westpac had previously seen an unchanged stance in May and a 40bps hike in June, it added that the bank does not have the luxury to wait for additional data on the labor market. Westpac sees the May meeting followed by 25bps hikes in July and August, and expects the Cash Rate to reach 1.5% by the end of the year.