Traders Raise Bets on RBA to Lift 0.5pc in October

The Australian Financial Review2022-09-07

The Australian dollar and equities fell after the Reserve Bank said it would continue to raise the cash rate, but economists and markets are divided on the pace and size of future increases.The RBA ...

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Yappy
2022-09-07
Yappy
Like
SeeWH
2022-09-07
SeeWH
Good sharing, thanks
candyysk
2022-09-07
candyysk
Ok

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The next couple of meetings and likely hikes will push policy settings into ‘restrictive’ territory,” Mr Rundell said.Interbank futures have raised speculation of a fifth consecutive 0.5 per cent lift in October, implying a one-in-three chance of a move. Heading into the decision, markets had priced in only a 12 per cent chance.The cash rate is expected to peak at 3.8 per cent by July next year, the same level projected before the policy decision.Australian bond prices briefly dipped after the RBA policy decision before going back to where they started the session. Three-year yields were unchanged on the day at 3.34 per cent. The 10-year rate stood at 3.7 per cent.The Australian dollar slipped 0.2 per cent to US67.86¢, pulling closer to a seven-week low of US67.71¢ touched last week.The RBA reiterated inflation was expected to peak later this year before falling back towards its 2 per cent to 3 per cent target range. It forecasts price growth to top 7.75 per cent this year.The headline inflation rate jumped to 6.1 per cent in the April to June quarter, its highest level in more than two decades.Regular or large?Mr Rundell expects the RBA to scale back the size of future increases with a series of “standard” 0.25 per cent increases, rather than the super-sized 0.5 per cent.JPMorgan agrees that the RBA seems to view conditions “in the ball-park of normal/neutral”, meaning monetary policy is no longer providing any significant tailwind to inflation.“This is broadly consistent with a tapering of the hike pace and entry into extended pause over the next few meetings,” said Ben Jarman, chief economist at JPMorgan. He anticipates a 0.5 per cent point lift in October, to be followed by a smaller 0.25 per cent increase in November before an “extended pause.”RBC Capital Markets, anticipates a smaller 0.25 per cent lift in October and November, but the currently aggressive tightening path of major central banks could influence the RBA to opt for a larger increment.“The biggest obstacle remains the global central banking backdrop, with the likelihood of further outsized increases from the Bank of Canada, European Central Bank, Bank of England and Fed in the coming weeks,” said Su-Lin Ong, RBC chief economist for Australian and NZ. “This is especially the case into the RBA October meeting with limited domestic data in the next four weeks.”Ms Ong projects the cash rate peaking at 2.85 per cent, but cautioned it could be higher.Westpac believes that policy should quickly move to neutral before switching to a slower pace as it traverses through contractionary settings. It anticipates increments of 0.25 per cent going forward and disputes the idea it will soon pause.“The RBA does not need to move unnecessarily quickly into the contractionary zone when it recognises the importance of lags and is forced to pause too soon,” said Bill Evans, Westpac’s chief economist.“But the language around the priority of inflation, labour markets and wages does not seem consistent with an imminent pause,” he said. “The better approach, now that neutral has been reached, is to maintain the emphasis on inflation being the central commitment while backing that up by continuing to tighten policy.”The Australian economy is ticking along despite higher interest rates. Employers face difficulty hiring staff due to a labour shortage with the unemployment rate of 3.4 per cent – the lowest in almost 50 years. The RBA expects it to fall further before ticking up as economic growth slows.Gross domestic product data will be released on Wednesday. Economists tip growth expanded 1 per cent in the June quarter, for an annual pace of 3.5 per cent.RBA governor Philip Lowe will speak about the economic outlook and monetary policy on Thursday and may give hints on the pace of future interest rate increases.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9938058034,"gmtCreate":1662527998028,"gmtModify":1676537081145,"author":{"id":"3572077804076143","authorId":"3572077804076143","name":"Yappy","avatar":"https://static.tigerbbs.com/ab4d89913ade03f15c782b99132ba22f","vip":1,"crmLevel":6,"crmLevelSwitch":0,"idStr":"3572077804076143","authorIdStr":"3572077804076143"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9938058034","repostId":2265061263,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9938059924,"gmtCreate":1662527238868,"gmtModify":1676537081012,"author":{"id":"4115710864200122","authorId":"4115710864200122","name":"SeeWH","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4115710864200122","authorIdStr":"4115710864200122"},"htmlText":"Good sharing, thanks&nbsp;","listText":"Good sharing, thanks&nbsp;","text":"Good sharing, thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9938059924","repostId":2265061263,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9938069723,"gmtCreate":1662523708562,"gmtModify":1676537080403,"author":{"id":"4097376940126320","authorId":"4097376940126320","name":"candyysk","avatar":"https://static.itradeup.com/news/64f60d94f5bea7832236facc0943ab72","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4097376940126320","authorIdStr":"4097376940126320"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9938069723","repostId":2265061263,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":35,"commentSize":3,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2265061263"}