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Analysts at TD Securities are looking for a 25bps cut at tomorrow’s RBA Board meeting but it is far from a done deal.

Key Quotes

“OIS is 42% priced for -25bp while the median is 1.25% (barely, at 14/26).”

“The decent Q1 core CPI miss & consecutive soft GDP prints suggest the RBA need not wait for a trend pickup in unemployment in order to cut tomorrow.”

“The market could see a dovish cut if more cuts lie ahead via significant downgrades to GDP/CPI forecasts (confirmed in Friday’s SoMP). We look for -0.5pp for GDP & -0.3ppt for core CPI in 2019.”

“We expect an explicit easing bias if the RBA keeps rates on hold. OIS is then likely to price the next cut in August if the RBA focuses on weaker inflation.”