Interest rate futures markets currently attach a 66% chance the RBA pauses, and a one-in-three chance it raises the cash rate by a quarter point to 4.10%. Rates are seen peaking at around 4.20% this year, according to current pricing.
This isn’t too dissimilar to current pricing around the Fed – a 75% probability of staying on hold next week and a 50% chance of raising by a quarter point in July.
Holders of Australian assets will be pay particularly close attention to policymakers’ statement and RBA governor Philip Lowe‘s press conference after the decision for guidance. Fed watchers will too, as it’s a position U.S. central bankers might find themselves in soon enough.
After sliding to a six-month low of $0.6450 last week, the Australian dollar goes into the meeting on a slightly stronger footing, last trading just above $0.66.
Asian markets more broadly could struggle for direction on Tuesday after a fairly mixed global session on Monday – Wall Street gave back gains to close in the red, although U.S. mega tech rose and Apple briefly hit a new record high; bond yields fell, but oil prices rose.
