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Analysts at TD Securities offer key insights on how to trade the October Reserve Bank of Australia’s (RBA) interest rate decision due on Tuesday at 0430 GMT.

Key Quotes:

“Oct OIS is pricing ~ a 75% chance to a 25bps RBA cut tomorrow and TD along with the bulk of the analyst community (BBG: 19/25, Reuters: 25/36) expect the RBA to ease.  We’re received Oct’19 OIS.

Q2’19 GDP at +0.5%/q missed the RBA’s +0.75%/q f/c and the RBA Gov noted in his  Armidale address  “we did not expect this slowdown, so it has come as a bit of a surprise”.

The  RBA’s Sep Minutes  removed reference to  “the accumulation of additional evidence”  for it to cut that had appeared in the  Aug Minutes. With the RBA playing catch-up to achieve its late 19/20 GDP f/c’s (that assume a 25bps Nov cut is delivered) and  the rise in spare capacity  supporting the Gov’s claim that  “wages growth looks to have stalled recently”, why should the RBA wait to cut?”