Central Banks

The Reserve Bank of Australia will hike its cash rate again on Tuesday 06 June 2022 (statement due at 0430 GMT) for the second month in a row.

Earlier previews:

This now via Scotia:

  • Economists think the RBA could hike by between 0.25% and 0.5% and markets have just over a quarter point hike priced in futures contracts.
  • When it first hiked on May 3rd, the RBA guided that further rate hikes will be required to achieve its over 2% inflation target that climbed to 5.1% y/y in Q1. Since then, Australia has seen a mild acceleration of wage growth to 2.4% y/y and 0.7% q/q non-annualized, a soft employment report of +4k with a large full-time gain offset by a part-time loss, and strong Q1 GDP growth and retail sales in April.
  • The RBA has already ended QE purchases of Australian bonds (January), chosen to end reinvestment of maturing bonds (May) and provided explicit guidance that it views outright bond sales as only a remote possibility.

The question is how big a rate rise. Camps are split between+25 and +40bps.

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