December RBA preview: no move expected at the final meeting of 2023
By Kyle Rodda
14:47, 4 December 2023
What is the market pricing for this RBA meeting?
Interest rate markets are implying a negligible chance of a rate hike at the final RBA meeting for 2023. According to the ASX’s RBA Rate Indicator, there is a 2% chance of a lift in the cash rate, with a 98% implied probability the cash rate remains at 4.35%.
Past Performance is not a reliable indicator of future results.
The odds of a rate hike fell following last week’s monthly CPI indicator. It revealed headline price growth moderated to 4.9% in October, falling to its lowest level since the beginning of 2022. The more critical trimmed mean figure, which strips out more volatile items, is falling more slowly; the latest data suggests it rose by 5.3% last month, dipping from 5.4% in September.
Source: Trading Economics
Economic data paints a mixed picture for the broader Australian economy. The labour market is weakening slightly; however, the unemployment rate remains near 50-year lows at 3.7%, with October’s labour force data revealing a much larger than expected 55,000 jobs added to the economy. Meanwhile, Retail Sales surprisingly contracted by 0.2% for the month, possibly signalling weaker household consumption – although it could be due to deferred spending ahead of the November discounting season.
The RBA’s meeting arrives one day before the September National Accounts, which is forecast to reveal a fall in the GDP growth rate for the quarter to 1.7% y/y, according to a survey of economists conducted by Reuters.
Technical analysis: AUD/USD
Expectations for rate cuts from the US Federal Reserve have weakened the US Dollar and pushed the AUD/USD to four-month highs. The pair is approaching a critical technical level at long-term downward sloping trend-line resistance.
Past performance is not a reliable indicator of future results.