A snippet from Westpac's look at the forex week ahead:
Reserve Banks of Australia and New Zealand meet
- swap markets pricing a May rate cut at around a 50% chance for both
- all we can say with confidence is that markets should react sharply to both rate decisions
Westpac is forecasting no change in Australia and a rate cut in New Zealand.
With the A$ trading today at 0.7000, the risks seem asymmetric.
- There may be only a (fragile) bounce on no change since the statement should include admission that growth and inflation forecasts have been cut since Feb and the RBA should adopt an easing bias.
- A rate cut however could be very damaging for the Aussie as markets scramble to price in the next easing and ponder how soft the economy must be for the RBA to cut rates 11 days before the federal election.
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RBA meet Tuesday 7 May
- Announcement at 0430GMT
- Governor Lowe's statement will accompany the decision
- There is no press conference, there never is but sometimes people ask.
- ps. On Friday next week (May 10) we get the RBA's quarterly 'Statement on Monetary Policy' … revised forecasts and such, expect lower outlooks for GDP and CPI.
