RBA Preview: Aussie should benefit moderately with no change in rates – Commerzbank

The Reserve Bank of Australia (RBA) will release its monetary policy decision on Tuesday, March 19. Economists at Commerzbank analyze Aussie’s outlook ahead of the meeting.

RBA likely to stay on track

It should come as no surprise if the new statement is very similar to the old one. Even though inflation has made good progress recently, there is still a long way to go to reach the RBA’s inflation target. And given that inflation has also taken longer to come down than in Western countries, there is reason to fear that disinflation in Australia will also stall with some delay. This would also be in line with the RBA’s latest forecast, which assumes a relatively slow decline in inflation to the target.

The RBA may remove the hint of another rate hike. This would be in line with the latest developments; after all, every market participant should now expect the next move to be down in Australia as well. However, I would not expect much more. There is still time for the RBA to give clearer signals at a later date, when new forecasts are published and more data is available. If the RBA follows our view, the Aussie should benefit moderately from the decision.