“We expect the Reserve Bank of Australia (RBA) to keep the policy cash rate on hold at 2.25% at the Monetary Policy Committee (MPC) meeting on 7 April,” wrote Chidu Narayanan of Standard Chartered Macro Research.
- The central bank kept rates unchanged in March, surprising markets, but in line with our forecast. The April policy decision will likely be a closer call than the one in March.
- “We expect the RBA to lower the cash rate another 25bps to 2.00% to further support demand, but believe the cut is more likely in May than April, when more data, particularly on Q1 inflation, will be available.”
- The RBA’s March meeting minutes indicate that the board believes the economy needs more time to adjust to the February rate cut.
- “However, money markets are pricing in a 75% chance of a 25bps cut in April. We expect that retail sales increased 0.3% m/m in February on increased tourist arrivals.”
The material has been provided by InstaForex Company – www.instaforex.com