The RBA meets for its monthly policy meeting on Thursday. What can we expect from policymakers?
Bank of America Global Research discusses its expectations for tonight’s RBA May policy meeting.
“We expect the RBA to keep the official cash rate steady at 0.25% at the May board meeting this week. The success of unconventional policies has seen the RBA slow bond purchases and reverse repo volumes in OMO, although the pace was unsustainable anyway. There is a high hurdle for the introduction of new policy levers this week and the Bank is likely to allow more time for the financial system to adjust to the existing measures introduced last month,” BofA notes.
“We expect no adjustments to the Exchange Settlement account surplus rate of 10bp, yield targeting approach or the Term Funding Facility. While we have picked up a slightly less dovish tone in our RBA Sentiment Indicator the Bank will continue to retain forward guidance that interest rates will remain unchanged for a very long time…In this context, negative seasonality in May suggests investors should be cautious of buying AUD at these level,” BofA adds.
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