Reserve Bank of Australia preview - the consensus expectations are for:

  • a 15bp rate cut to the cash rate, which will bring it to 0.1% from its current 0.25%
  • also a 15 bp cut to its 3-year yield target and term lending facility (taking these also to 0.1%)
  • a QE programme for the longer bonds, 5-to-10 years

Back on October 15 RBA Governor Lowe spoke on the Bank's shift on inflation targeting:

  • inflation target remains between 2 and 3%
  • but instead of the RBA targetting where it forecasts inflation will be (the RBA forecasts have been persistently very wrong for many years - the RBA had forecast, over and over again, a lift in inflation that never materialised) it now targets actual inflation.

Lowe also emphasised the Bank's second mandate, saying driving unemployment lower is:

  • an important national priority. Consistent with our mandate, we want to do what we can do, with the tools we have, to ensure that people have jobs

While the shift to how the Bank is targeting inflation was bluntly communicated, the choice of forum was bizarre - Lowe's speech was not meant to be about a massive shift in RBA policy. Analysts have (mainly, not all, see linked previews below for some alternative viewpoints) shifted their view on RBA policy to dramatic action at the November meeting. Those analysts with access to insider officials at the Bank (there are some) have cemented in expectations of the three key points above or moves very similar indeed.

Earlier previews posted:

RBA announcement and Lowe's accompanying Statement are due at 0330GMT on Tuesday Nov. 3.

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