It’s been a fun start to May, but don’t rest on your laurels just yet. While watchful eyes will be on US inflation data next week, we still have this week to look at first. And on the calendar, there are major central bank meetings that we must be wary of. The BOE and RBA will be present in this regard, so is there anything we should pay attention to?
The BoE’s policy decision will be made on Thursday, but it is expected to be largely a non-event. The first rate cut is currently scheduled for August. So this is still the data for the next two months. There should be little or no change in the BOE’s policy language, so don’t look for much in the statement.
Bailey’s press conference will be more interesting, to check again whether the central bank is comfortable with the latest market prices. They’ve already said they’re OK with a possible August move, so we’ll see. As for the year itself, traders currently expect rates to fall by around 47 basis points.
As for the RBA, the policy decision will come tomorrow and it will be interesting to see how things change after the latest inflation figures. The fact is that traders have already abandoned the rate cuts imposed by the Australian central bank this year. In fact, the yield curve is leaning towards rising rates.
Spot rate futures show about a 42% chance of a rate hike for August and September. And that’s the risk for the Aussie tomorrow.
Will the RBA adopt a more hawkish stance and keep the option of a rate hike on the table? Or will they insist that inflation remains on track, even after the latest figures?
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