Bank of America Global Research discusses its expectations for tonight's RBA August policy meeting.
"The Reserve Bank of Australia (RBA) is expected to continue tightening with another 50bp hike this week, the third such move in as many months to equal the tightening by the US Fed. Guidance should remain hawkish as inflation forecasts will rise further. We see another 50bp hike in September before fiscal policy returns to focus with the Budget in October. We see rates ending the year at 2.85% compared with market pricing around 3.05%, down from 3.43% prior to release of 2Q CPI data. Further rate hikes and a peak in inflation will see real rates rise over 2023," BofA notes.
"The repricing of AUD overnight index swap (OIS) rates and bull-steepening of curves now leave more room for a hawkish (rather than dovish) RBA surprise...AUD FX unlikely to benefit from hawkish RBA near term but more constructive in 4Q," BofA adds.