RPT—🏦🇦🇺Cable FX Macro Weekly Note: RBA February Monetary Policy Meeting

**As seen in Risk In The Week report 02/02/24, subscribe at cablefxm.co.uk/reports 

The RBA will hold its first monetary policy decision of this year on February 6 (local time, Feb. 5 eastern). We will be watching any adjustments of communication toward China's outlook, inflation, and the lag between price/wage response to lower domestic growth. The last time the central bank met, the board expressed their view on limited upside room for wages, the latest data point showed hourly wages rising by 1.3% Q/q in Q3 as private sector wages rose by 1.4%. Additionally, the RBA said that the need for further tightening will depend on data. Q4 inflation showed both trimmed mean and weighted median price measures slowing, the former is now rising at 4.2% Y/y which is the lowest level since Q1 2022. On top of that, the labor market recently posted a downside surprise of -65.12K jobs vs the median estimate of 15.0K. The developments have led to a repricing of RBA rate bets, cash rate futures market price in the first reduction coming in May. We remind you that the new RBA meeting format is live this year, each decision will be supplemented by a SoMP and a press conference.

Analysts at NAB scrapped their February rate hike view and now expect the board to hold the Cash Rate steady, they added that the RBA is likely to stay on hold until November and now see 125bps of rate cuts by the end of 2025. NAB warned that goods disinflation may occur more rapidly than expected in Australia, however, this is likely to be offset by still strong services prices. The desk at ANZ sees the central bank revising both growth and prices lower across the horizon, they expect the June 2026 inflation projection at 2.5%. ANZ noticed that risks are tilted toward an earlier start of an RBA easing cycle; their call sits for November.