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Feb 06 - 09:55 AM

AUD: Hike On Tuesday, But Then What? - Credit Agricole

By eFXdata  —  Feb 06 - 08:30 AM

 Credit Agricole CIB Research discusses its expectations for AUD around this week's RBA meeting. 

"While cyclical data is softening, a jump in the RBA’s preferred measure of core inflation, trimmed mean inflation, to 6.9% YoY in Q4 and well above its forecast for a 6.5% YoY rate will still see the central bank raise its cash rate by 25bp to 3.35% on Tuesday, in our view. But with the market over 80% priced for such a hike, most of the impact on the AUD will come from the RBA’s rhetoric including its revised growth and inflation forecasts," CACAIB notes. 

"Indeed, the market is also pricing in two-to-three 25bp rate hikes (including 25bp tomorrow), so the risk for the AUD is if the RBA hints at a pause. We do not think that will be the case, however, as the central bank will likely revise up its trimmed mean inflation forecasts in a sign it is concerned core inflation is going to prove stickier than expected," CACIB adds. 

Crédit Agricole Research/Market Commentary


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