**As seen in Risk In The Week report 03/17/24, subscribe at cablefxm.co.uk/reports
In early February, the RBA decided to leave the Cash Rate target unchanged at 4.35%, the benchmark interest rate was altered in November when the board hiked the target by 25bps. During this tightening cycle, the RBA has lagged developed market central banks in terms of hikes and nominal rate levels. However, we have seen an emergence in policy outlook split as the Fed is looking to reduce the cost of capital while the RBA recently said it could not rule out further rate increases. Central bank credibility is in play and given the fact that the head at the RBA has only been on the seat a couple of months, there is room to question the bank's posture.
The desk at Morgan Stanley said that the RBA will likely keep the current policy level unchanged until early next year, they added that the board will probably deliver no material changes in communication during the March meeting. Also, Morgan Stanley sees the RBA maintaining a tightening bias as it keeps the "further increase in interest rates" line in its policy statement.
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