ANZ said the tone of the Reserve Bank of Australia's post-meeting statement was more hawkish than expected, with no clear opening to a pause in June despite the board noting it has "raised the cash rate three times," according to a Tuesday note by the bank.
The bank said this does not necessarily mean another rate increase is a done deal, but shows the board's preference to keep its options open, adding that the subsequent press conference carried more of the "pause-related language" ANZ had expected in the policy statement.
ANZ said its expectation remains that the board will pause in June, with the 5:4 vote cast in March suggesting a strong preference among certain board members for moves in Statement on Monetary Policy meetings.
By August, without a swift resolution to the Middle East conflict and a resumption of oil flows, ANZ expects Australian activity data to look soft enough to keep the RBA on hold, though risks now appear more skewed toward a rate hike in August than before this meeting, given the ongoing focus on capacity pressures and the more hawkish tone, the bank added.
ANZ said RBA staff appear to be anticipating a 1% trimmed mean inflation outcome in the second quarter compared with the first quarter, which would make it difficult for the board to hold rates steady in August in the absence of soft activity data.
ANZ said it forecasts a slightly lower trimmed mean outcome and sees risks to the RBA's second-quarter unemployment rate forecast skewed toward a higher reading, it added.
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