Not too early for Westpac anyway

Bill Evans on the meetings coming up (Tuesday April 5).

The TL;DR version first;

  • We expect that the Board will decide to hold rates steady.
  • It remains our long held view that the RBA will keep rates on hold for the remainder of 2016.
  • By far the most important issue around the announcement at 2:30pm next Tuesday will be whether the Governor decides to strengthen his commentary around the Australian dollar.

And, a bit more:

  • Steady rates will come as no surprise to markets with the probability of a move that is priced into the curve running at just around 5%

On the AUD:

The most important market development since the last Board meeting on March 1 has been the surge in the Australian dollar.

  • Supporting the lift in the TWI has been a rise in Australia's export commodity prices.
  • By far the most important issue around the announcement at 2:30pm next Tuesday will be whether the Governor decides to strengthen his commentary around the Australian dollar ... we do not expect to see any significant changes in the Governor's Statement next week.