The Reserve Bank of Australia (RBA) is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
The RBA is widely expected to hold the Official Cash Rate (OCR) at 4.35% following its September monetary policy meeting. The decision will be announced at 04:30 GMT, with Governor Michele Bullock's press conference to follow at 05:30 GMT.
Economists and industry experts unanimously expect the central bank to hold the policy rate yet again after RBA Governor Michele Bullock clearly said in her speech at the Anika Foundation earlier this month that "the board does not expect to be in a position to cut rates in the near term.".
Bullock argued that inflation pressures, particularly in home construction, insurance and the rental market, continued to be high in some parts of the economy even though Australian Treasurer Jim Chalmers voiced concerns that interest rates have "smashed" the economy.
Australia's economy, however, added more jobs than expected in August as the Unemployment Rate remained steady at 4.2%, the Australian Bureau of Statistics (ABS) reported on September 19. Strong Australian employment data indicated the labor market resilience, in the face of a slowing economy, supporting the RBA's view that an interest-rate cut appears less likely in the short term.
RBA Assistant Governor (Economic) Sarah Hunter said earlier this month that "the labor market is still tight relative to full employment." She added that the bank "viewed current conditions to be ‘above' full employment with jobless rate needing to rise to ensure inflation's retreat continued."
Further, the RBA is unlikely to act until the release of the critical Consumer Price Index (CPI) data for Q3, due on October 30, which could validate the central bank's progress on inflation.
Previewing the RBA policy decision, analysts at TD Securities (TDS) said: "RBA communication and the run of data since the Bank's August meeting provides no compelling reason for a shift in stance at this week's meeting, ruling out a rate cut this year." (ayu)
Source : FXstreet
