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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.