At the RBA’s last meeting in mid-March, policymakers watered down their tightening bias, although Bullock declined to say whether policy has shifted to neutral, saying risks were “finely balanced”, and pushed back immediate rate cuts.
Since then, U.S. rate cut expectations have receded further, the Australian dollar has recovered some ground, and domestic inflation has not cooled as much as analysts or policymakers had hoped.
The consensus view from economists is still for the cash rate to be cut by a quarter point in September, but money markets are leaning the other way and are currently attaching a 50-50 chance of a quarter point hike in September.
Elsewhere, official figures are expected to show a apick up in consumer price inflation in the Philippines with the annual rate rising to 4.1% in April from 3.7% in March – not the direction of travel the central bank wants to see.
Price pressures in Taiwan, however, are more closely influenced by dynamics in China, where deflation has been more of a threat to the economy recently than hot inflation.
China releases its latest official FX reserves figures, which will be closely watched for signs Beijing may be offloading some of its U.S. Treasuries to support the yuan. Total reserves are seen dipping to $3.225 trillion in April from $3.246 trillion in March.
