RBA Preview: No hawkish tone expected in April’s statement - TDS

Analysts at TDS offer a brief preview of today’s Reserve Bank of Australia’s (RBA) monetary policy decision that will be announced at 0430 GMT.

Key Quotes:

“We can't see how the RBA can inject hawkish tones into April's Statement compared with the one released earlier this month. Aside from monthly employment and NAB business conditions continuing to shine, which should see the Bank retain its focus on the 'gradual' improvement in inflation and unemployment, hard data outcomes - Jan retail sales, Q4 GDP - have disappointed. Also, metal/bulk prices have generally softened, led by a near 20% decline in the iron ore price this month.

Of more interest is the rise in the 3m BBSW rates, yet bill futures do not believe the move will be sustained. Our work suggests that repo could remain elevated and this could keep the cost of unsecured funding elevated as well. Accordingly, bill futures should ultimately correct lower in price. We will assess this post the Q1 turn.”