Prashant Newnaha, Senior Asia-Pacific Rates Strategist at TD Securities, offer a sneak peek at what to expect from February’s Reserve Bank of Australia’s (RBA) monetary policy decision.
“Yesterday’s Dec employment number provides the RBA an out from cutting next month, following a number of positive, but limited series of data prints.
The weak details from Q3 GDP suggest RBA forecasts could be cut in the Feb SoMP, but the RBA may draw comfort from recent data and improving offshore sentiment, potentially limiting SoMP downgrades.
We have little insight into the RBA’s reaction function. However, the drop in the unemployment rate and improving global outlook tilt the balance in favour of the RBA remaining on hold in Feb. April is lining up as the next likely month the RBA could cut.”