RBA preview – In May and June the Bank surprised with rate hikes … "here we go again"

<p>The Reserve Bank of Australia monetary policy decision and statement is due on Tuesday, 4 July 2023 at 2.30pm Sydnay time</p><ul><li>0430 GMT</li><li>0030 US Eastern time </li></ul><p>Earlier previews are here:</p><ul><li><a href="https://www.forexlive.com/centralbank/anz-still-expect-a-rate-rise-from-the-rba-next-week-a-25bp-cash-rate-hike-20230628/" target="_blank" rel="follow" data-article-link="true">ANZ still expect a rate rise from the RBA next week, a +25bp cash rate hike</a><ul><li><a href="https://www.forexlive.com/news/anz-expects-25bps-rate-hike-from-rba-on-tues-and-scope-for-audnzd-rally-next-week-20230630/" target="_blank" rel="follow" data-article-link="true">ANZ expects 25bps rate hike from RBA on Tues and scope for AUD/NZD rally next week</a></li></ul></li><li><a href="https://www.forexlive.com/centralbank/after-australias-better-cpi-data-yesterday-nab-still-expect-a-july-rba-rate-hike-20230628/" target="_blank" rel="follow" data-article-link="true">After Australia's better CPI data yesterday NAB still expect a July RBA rate hike</a></li><li><a href="https://www.forexlive.com/centralbank/westpac-reaffirms-its-forecst-for-a-25bp-reserve-bank-of-australia-rate-hike-on-july-4-20230630/" target="_blank" rel="follow" data-article-link="true">Westpac reaffirms its forecst for a 25bp Reserve Bank of Australia rate hike on July 4</a></li></ul><ul><li><a href="https://www.forexlive.com/centralbank/only-one-of-australia-big-four-banks-expects-the-rba-cash-rate-to-remain-on-hold-this-week-20230702/" target="_blank" rel="follow" data-article-link="true">Only one of Australia big four banks expects the RBA cash rate to remain on hold this week</a></li></ul><p>Via Scotia, their thoughts:</p><ul><li>Think back to May 2nd and June 6th. On both occasions, the Reserve Bank of Australia surprised consensus with 25bps hikes. Now here we go again with consensus once again expected no change to the cash rate of 4.1% this Tuesday but with markets pricing a return to hiking later.</li><li>This time, however, it’s a razor thin divide between a hike expected by 13 forecasters and no hike expected by 14. Markets have been flirting with around one-in-three odds of a hike. Since the last hike, job growth smashed expectations at 76k (18k consensus) but monthly CPI for May landed shy of expectations. The labour market remains very tight with an unemployment rate hovering around a record low of 3.6% which may provide cover for a hike in the context of wage-Phillips curve and traditional wage-price Phillips curve connections.</li></ul><p>And this via Bank of America:</p><ul><li>We expect that the RBA will keep rates unchanged at 4.1% in July due to softer monthly inflation. This gives the RBA an opportunity to wait for Q2 CPI data due on July 28th, as well as another labour force release on July 20th. But there is a potential for a 25 bps hike in August, taking the cash rate to 4.35%. If the RBA holds rates in July, it may weigh on the AUD in the near term. However, the AUD's downside would be limited if the RBA signals that further tightening is likely.</li></ul><p>Reserve Bank of Australia cash rate &amp; Australian inflation </p>

This article was written by Eamonn Sheridan at www.forexlive.com.