📝 RBA Outcome More Hawkish Than Expected: Westpac

The combination of 25bps, the clear statement that ensuring that inflation returns to the target over time “will require a further lift in interest rates over the period ahead” and that “the Board does not plan to reinvest the proceeds of maturing government bonds and expects the Bank's balance sheet to decline significantly over the next couple of years as the Term Funding Facility comes to an end” meant that this was a more hawkish outcome than expected. The RBA also announced a 4pm press conference including a Q&A session which will be a key focus for markets. However, we remain of the view that the broad US dollar rise looks set to continue through this week’s Fed ‘super-tightening’ campaign and beyond. The BoJ doubling down on YCC and PBoC policy easing adds to that dynamic. With global growth weakening, the A$ should remain on the back foot in coming weeks and dips below 0.70 are possible. - Westpac Strategy