RBA Shadow Board recommends a rate hike at tomorrow's monetary policy meeting

<p>The shadow board cits high official inflation data and more:</p><ul><li>Most recently, the monthly consumer price index (CPI) rose 5.6% in the twelve months to September 2023, while the quarterly inflation rate fell to 5.4% year-on-year in Q3, the lowest since the first quarter of 2022. </li><li>The RBA’s Trimmed Mean CPI, which excludes the most volatile items, grew by 5.2% year-on-year, still well above the RBA’s target band of 2-3%. </li><li>The labour market remains remarkably resilient but business confidence is softening further and the global economy, while surprising on the upside, faces considerable challenges, especially geopolitical. </li><li>On balance, the RBA Shadow Board recommends increasing the cash rate in November. It attaches a 62% probability that the overnight rate should increase to a level above 4.10%, a 37% probability that the overnight rate should remain on hold, and a 2% probability that the overnight rate should be lower.</li></ul><p>—</p><p>

The Reserve Bank of Australia 'shadow board' is made up of 9 voting members and 1 non-voting chair:</p><ul><li>all distinguished macroeconomists, offers its own policy recommendation on the Monday before the official RBA decision. Members give probabilistic assessments of the appropriate target rate for each round, which are then aggregated. The higher the percentage attached to a given cash rate, the greater the confidence that this rate is the appropriate target.</li></ul><p>An initiative sponsored by the Australian National University's Centre for Applied Macroeconomic Analysis (CAMA)</p><p>—</p><p>RBA statement is due at 2.30pm Sydney time, which is 2230 US Eastern time and 0330 GMT.</p><p>Earlier:</p><ul><li><a href="https://www.forexlive.com/centralbank/failure-to-act-on-high-cpi-threatens-to-damage-the-reserve-bank-of-australias-credibility-20231026/" target="_blank" data-article-link="true">Failure to act on high CPI threatens to damage the Reserve Bank of Australia's credibility</a></li><li><a href="https://www.forexlive.com/centralbank/reuters-poll-rba-to-high-cash-rate-to-435-on-november-7-20231103/" target="_blank" data-article-link="true">Reuters Poll: RBA to high cash rate to 4.35% on November 7</a></li><li><a href="https://www.forexlive.com/centralbank/imf-tells-the-rba-to-hike-interest-rates-higher-and-hold-em-high-for-longer-20231101/" target="_blank" data-article-link="true">IMF tells the RBA to hike interest rates higher, and hold 'em high for longer</a></li><li><a href="https://www.forexlive.com/centralbank/westpac-now-forecasting-a-november-reserve-bank-of-australia-rate-hike-20231026/" target="_self">Westpac forecasting a November Reserve Bank of Australia rate hike</a></li></ul><ul><li><a href="https://www.forexlive.com/centralbank/ubs-forecasts-a-november-rba-interest-rate-hike-and-likely-more-to-come-after-that-20231025/" target="_blank" data-article-link="true">UBS forecasts a November RBA interest rate hike, and likely more to come after that</a></li><li><a href="https://www.forexlive.com/centralbank/rba-rate-hike-incoming-on-november-7-will-they-hike-again-in-december-20231025/" target="_self">RBA rate hike incoming on November 7 – will they hike again in December?</a></li><li><a href="https://www.forexlive.com/centralbank/commonwealth-bank-of-australia-forecast-a-25bp-rba-rate-hike-on-november-7-20231025/" target="_self">Commonwealth Bank of Australia forecast a 25bp RBA rate hike on November 7</a></li><li><a href="https://www.forexlive.com/centralbank/australia-demand-for-luxury-supercars-through-the-roof-20231025/" target="_self">Australia – Demand for luxury supercars "through the roof"</a></li><li><a href="https://www.forexlive.com/news/australian-treasurer-chalmers-says-inflation-is-moderating-but-persistent-20231025/" target="_self">Australian Treasurer Chalmers says inflation is moderating but persistent</a></li><li><a href="https://www.forexlive.com/centralbank/anz-forecasts-a-25bp-rba-interest-rate-hike-on-november-7-previous-forecast-was-december-20231025/" target="_self">ANZ forecasts a 25bp RBA interest rate hike on November 7 (previous forecast was December)</a></li><li><a href="https://www.forexlive.com/centralbank/australia-market-is-rapidly-pricing-in-a-november-rate-hike-after-surging-inflation-data-20231025/" target="_self">Australia – market is rapidly pricing in a November rate hike after surging inflation data</a></li><li><a href="https://www.forexlive.com/centralbank/audusd-jumped-higher-on-australian-inflation-data-november-7-rate-hike-is-likely-now-20231025/" target="_self">AUD/USD jumped higher on Australian inflation data, November 7 rate hike is likely now.</a></li></ul>

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