Traders price in near-certainty of no change today, with only 14 bps of hikes expected by year-end amid softer inflation.
The Reserve Bank of Australia is widely expected to keep its cash rate steady at 4.35% in today’s decision, following softer inflation data in July. Markets assign a 97% probability to no change, with forward guidance likely mirroring prior statements emphasizing data dependency and inflation risks.
Prior to the decision, the RBA held rates unchanged in June, citing tighter financial conditions and signs of economic slowing. However, inflation remained elevated, prompting the board to emphasize vigilance on incoming data. Traders now see an 82% chance of no move in September, while November and December meetings are viewed as toss-ups.
Only 14 bps of rate hikes are priced in by year-end, reflecting subdued expectations for further tightening unless inflation reaccelerates. The statement’s tone will be scrutinized for any hawkish leanings or dissenting views.