According to Chidu Narayanan, economist at Standard Chartered, the Reserve Bank of Australia’s (RBA’s) June meeting is likely to be a close call.
“April labour-market data was not sufficiently bad by itself to lead the RBA to cut rates in June, after it left rates unchanged in May. The post-meeting statement in May was only mildly dovish, suggesting rate cuts are some time away. However, the RBA’s forecasts in its quarterly Statement on Monetary Policy (SoMP) suggest persistent weakness, despite a likely 50bps of rate cuts. The June policy decision is unlikely to be driven solely by today’s labour-market print; rather, we believe the decision will depend on what drove the RBA to keep rates on hold in May. OIS markets are now pricing in a 15bps rate cut in June, up from 10bps ahead of the labour-market print. We look to Lowe’s speech to assess the timing of RBA’s rate cuts; we currently see the RBA on hold in June.”
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