In terms of market pricing, we're seeing roughly 46 bps priced in already so that points out the sort of balance heading into the decision today. The RBA tends to have the propensity to go with the unorthodox but there should not be any major suprises. The language change in August is expected to be maintained, that being:
"The Board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path."
That was the subtle shift by the RBA last month that indicated that they might go slower on the pace of rate hikes or at least are open to that option, following something similar from the Fed in July. In other words, the Fed is still in charge of the wheel and the RBA is merely just the passenger hopping on for the ride.
So, with the Fed still erring towards a potential 75 bps rate hike this month, the RBA can keep with the aggressive rate hikes for now as well.
Cash rate futures indicate that markets are seeing that the tightening cycle will extend towards 3.80% by the middle of next year but there's still plenty of uncertainty up in the air. The RBA is pretty much on the same tightening path as the Fed, so it really depends on the latter's resolve in fighting the good fight against inflation - even with the economy slowing down considerably.
