**As seen in Risk In The Week report 11/03/23, subscribe at cablefxm.co.uk/reports
The Australian central bank left its Cash Rate target at 4.10% in October. The RBA repeated that inflation remains above mandate and that further policy tightening may be required, their policy stance was interesting as it has been holding rates for some months now. The central bank had previously noted that the pause was meant for the board to assess data and the effects of past tightening. More recently, RBA's Kent noted the need for more rate hikes and the central bank said that a CPI outlook raise could lead to another lift in the cost of capital. As a reminder, Australia 3Q saw both headline and trimmed mean CPI rising by 1.2% Q/q, above the consensus median. An inflation rebound paired with stabilization in Chinese data could give the RBA confidence to deliver another rate increase. Economists at ANZ now pencil a 25bps Cash Rate hike in November, they said this will mark the peak at 4.35% but noted risks for further tightening. ANZ said that any policy easing remains a very long way off. As desks lift their RBA calls, the tweaks could spur policy divergence outlooks vs EUR and CAD. The desk at CBA noted that the A$ drivers remain global, they see expectations for Chinese growth outlook and broad USD trend to have a larger impact on AUD/USD.
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