Bank of America Global Research previews next week's May RBA meeting.

"We expect the RBA will hike by 25bps, but it's a close call. Inflation is above target and set to rise further, while the labour market remains too tight. However, the decision will ultimately depend on how the Board weighs upside inflation risks against downside growth risks, and we expect this debate will lead to a split decision. But the case to front-load hikes is stronger, as holding amid rising inflation could feed into expectations, pushing inflation higher," BofA notes.

"In our least likely scenario, a surprise RBA pause, we expect a more marked move in FX than rates given AUD longs appear quite crowded. AUD could slip below 0.70, but we would be buyers there," BofA adds.