Barclays following up on the Reserve Bank of Australia policy announcement and statement for the October meeting:

  • We expect the RBA to remain patient and wait for signs of a more broad-based recovery across businesses and household incomes before firmly signalling any change in monetary policy stance
  • Governor Lowe clearly stated in his parliamentary testimony that, within the RBA, the preference is for rates to move up, not down, from current levels
  • However, the bar for hiking rates is high, hence, rate hikes are likely to be "some time away"
  • Further, board member Ian Harper indicated that the rate of growth, while improving, remains too slow to justify a rate hike
  • We forecast the RBA will raise the policy rate by 25bp at the August 2018 MPC meeting followed by a 25bp rate hike in November

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