Synopsis:

Barclays expects the Reserve Bank of Australia (RBA) to leave the cash rate unchanged at its April meeting, continuing its gradual and cautious easing path. The tone is expected to be hawkish, in line with Governor Bullock’s framing of February’s cut as a policy correction—not the start of a cutting cycle. With markets already pricing 18bp for May, Barclays sees the risk skewed toward a firmer tone, and recommends long AUD/NZD into the event.

Key Points:

• No Rate Cut Expected Tuesday:
  RBA likely to hold rates steady, maintaining a hawkish posture and reiterating caution despite easing signs in inflation.

• February Cut Framed as a One-Off:
  Governor Bullock emphasized the February 25bp cut was to reverse the November 2023 insurance hike, not to set off regular cuts.

• Market Pricing Leaves Room for Hawkish Surprise:
  With 18bps of cuts already priced for May, Barclays sees a risk of pushback from the RBA, potentially leading to a reassessment of near-term rate cut expectations.

• Tariff Risks Benign for Australia (so far):
  Despite global trade uncertainty, the RBA’s Statement on Monetary Policy (SOMP) saw only limited downside risk to Australia from US tariffs.

• Pre-Election Fiscal Easing Supportive:
  Modest fiscal support ahead of upcoming elections is expected to buttress growth, further reducing urgency for more easing.

• FX Strategy – Long AUD/NZD:
  Barclays sees the RBA’s relatively hawkish stance in contrast with the RBNZ’s ongoing easing bias, making long AUD/NZD a compelling trade into the meeting.

Conclusion:

Barclays anticipates a hawkish hold from the RBA on Tuesday, which may catch a dovishly tilted market off guard. With tariff impacts seen as manageable and election-linked fiscal support in the mix, the RBA has room to pause and reassess. AUD/NZD longs are favored into the meeting as a clean way to express this view.